Good day, thank you for standing by. Welcome to the Applus+ first half 2022 results presentation. At this time, all parties are in a listen-only mode. After the speaker's presentation, there'll be a question- and- answer session. To ask a question during the session, you will need to press star one and one on your telephone. You will then hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Aston Swift, Investor Relations. Please go ahead. Thank you, Sharon. Good morning, everyone. Welcome to the first half 2022 results presentation of Applus+. I'm Aston Swift, Investor Relations, and sitting alongside me is Joan Amigó, our recently appointed Chief Executive Officer. Joan will make the whole presentation, starting with the highlights, followed by the finance review, operations review, the outlook for the year, and then a couple of slides on the status of the strategic plan, including some additional actions. This presentation should take around 25 minutes, then we will open the lines for Q&A. I will now hand you over to Joan. Thanks, Aston, and good morning all, and thank you for joining the call. I'm Joan Amigó. I'm excited to be here today for my first earnings call as CEO. I begin with the highlights. We have had a strong first half of the year with all divisions performing well. Organic revenue growth of 8.6% for the first half is at the top end of our guidance of mid-to-high single digit, and we also have a good contribution of revenue added through acquisitions. We made five acquisitions this year already, two in cybersecurity with the others in metrology, environmental consultancy, and statutory vehicle inspection in liberalized markets. These are all aligned with the strategic plan. We have had three notable auto concession renewal, with Galicia being the most important that now extended to December 2027. Unfortunately, we did not achieve the renewal of the concession in Costa Rica, which has now ended. In terms of the financial highlights, total revenue was up 17%, while our adjusted operating profit increased by 21%, around half of which was organic. This has translated into a margin up 30 basis points. Cash flow was also very strong and leverage remains comfortable after absorbing the acquisitions and share buyback. Equally important, our bottom line adjusted earnings per share was up 27%, which has come from the increase in earnings, further enhanced by the share buyback acquisition. In conclusion, our strategic plan to unlock value is progressing well and already showing improved results. Moving on to the financial slides, I will start with the revenue bridge. The strong revenue growth of 17% was made up of an increase in organic revenue of 8.6%, the contribution from acquisitions made in the last 12 months of 4.7%, and a positive currency translation of 3.7% due to the depreciation of the euro in front of most of the currencies we report in, with the U.S. dollar being the most significant. We had an acceleration in organic revenue growth in Q2 vs. Q1, with Q2 at 10%. Inflation is a key topic for this year, and I'm pleased to see that we have been successful so far in passing on the majority of our wage and cost inflation on to our customers. In the organic revenue growth of 8.6% in H1, around one quarter is from price and the rest is volume of work. Around 2.2% of the revenue increase is from higher prices and around 6.4% is from more volume. The 4.7% in organic revenue growth relates to six acquisitions closed in 2021, as well as two that closed in the first half of 2022. These include Lightship Security that was closed in February this year, ALPE Metrología Industrial, and Entidad IDV Madrid that both closed in April. From the adjusted operating profit bridge, you can see the increase by 21% to EUR 97 million in the first half of 2022 compared to the same period in the prior year. This was made up of an increase in organic adjusted operating profit at constant exchange rates of over 10%, a contribution of 6% from acquisitions, plus 4% from FX. The margin in the first half of last year was 9.5%, and this increased by 30 basis points to 9.8%. Both first and second quarters had an increase of 30 basis points. Three out of the four divisions of the group had higher margin in this first half period compared to the first half of last year. Labs was the only division with a lower margin, mainly due to the impact of the lockdown in Shanghai. Slide number eight, summary of the income statement. Below the adjusted operating profit, we show in detail the items we adjust for. The first is the amortization of intangibles by an amount of EUR 34.3 million, which is EUR 3 million more than the previous year due to investing acquisitions. The other results of EUR 3.8 million relate mainly to restructuring of over EUR 1 million and transaction costs of EUR 2.5 million related to the recent acquisitions. After taking this one off, the statutory operating profit is EUR 59.1 million, up EUR 13.3 million or 29%. Net financial expense of EUR 12.8 million, including 3.7 from IFRS 16, is EUR 1.3 million higher than last year, mainly due to the increase in net debt. We maintain our guidance of EUR 26 million- EUR 27 million finance expense for the whole year. The effective corporate tax rate is 25.5%. We expect slightly lower rate at year-end. Please go to the first slide in the appendix where we detail this. Non-controlling interest or minorities were EUR 8.7 million, just a bit higher than last year. Our guidance for the full year was previously EUR 20 million, but now that Costa Rica has ended, which has a significant minority interest, the figure for the full year will be slightly lower. Overall, the adjusted net profit was EUR 53.3 million for these six months, and the adjusted earnings per share was EUR 0.38 compared to EUR 43 million and EUR 0.30 last year. The adjusted net profit increase is 2%, 12 points higher than the adjusted operating profit increase, and the EPS increase is a further 3.9%, 12 points more. As I am sure you remember, we started a 5% share buyback in February, which finished in May, and these shares have been approved for cancellation. The average share count reduced in the first half by 4.3 million, driving the EPS accretion. In the second half and for next year, the average share count will be the full 5% lower, which is 7.1 million shares less. We also have a strong cash generation in the first half, driven by the rising profits and reduce the working capital outflow. Adjusted free cash flow was EUR 71.5 million, up EUR 30 million or 71.5%. Taxes outflow was EUR 2 million higher than last year, and we expect around EUR 38 million-EUR 40 million for the whole year. Interest cash outflow was up EUR 1.4 million vs. Last year, and we also leave and change our guidance for the whole year to be an outflow of EUR 13 million-EUR 14 million. The dividend paid to minority share interest were only EUR 1.9 million compared to EUR 8.1 in 2021 due to the timing on these dividends payments. By the full year, we expect this to normalize and be around EUR 18 million-EUR 19 million. Acquisition cash outflow of EUR 42.8 million relates to the payments made to acquire Lightship Security, ALPE Metrología Industrial, and Entidad IDV Madrid. We have the balance sheet movements in cash, starting with the IFRS 16 of EUR 31.8 million. The increase of EUR 46.9 million in financing is mainly the drawdown of the revolving credit facility. We have the cash out for the 5% share buyback of EUR 53.6 million, which was completed in H1. Overall, another period of a strong cash flow generation, which allow us to pursue our portfolio evolution strategy. This is the last financial slide, where I will show you that our balance sheet is in a very good shape, and we have a high level of liquidity. Our total net debt at the end of June 2022 was EUR 871 million, 672 pre IFRS 16, and this is EUR 68 million higher than the position at the end of 2021. Leverage, as net debt to EBITDA, has been maintained at 2.7 times. Liquidity at the end of June, we had EUR 494 million of cash and undrawn facilities available, which we consider to be sufficient for our needs and to carry out our investment strategy. In conclusion, good cash generation with leverage maintained and high liquidity. That ends the financial slides. In the appendix, we provide further information, including a slide on the main currency rates. I'm now going to present the key financial and operational highlights in the four divisions, starting with the largest division by revenue, Energy & Industry. We have had a very strong growth in the division with total revenue growth of almost 22%. The 10% organic revenue growth was the same in Q1 and Q2. The margin increase of close to 60 basis points was good, and this drove a total adjusted operating profit increase of 32%. Every segment grew well, mostly in the double digits, through a combination of a strong volume growth with some price increase on top. Infrastructure, renewals, and oil and gas had outstanding results, with the three growing double digits and representing just under three quarters of the total revenue of the division. Power and industrials grew at single digits. It is encouraging to have good visibility and healthy backlog of projects, especially for new infrastructure and civil construction in Southern Europe, Latin America, and Middle East. That represents around 75% of our infrastructure market globally. Oil and gas, that is half of the division revenue, was the strongest growing in market at double digits, with OpEx being 2/3 of the growth in absolute figures and across most of the regions. The margin for oil and gas improved year-on-year, but it is still below the divisional average. Finally, this is the month we announced the acquisition of K2 in Colombia that generated EUR 13 million revenue in 2021. The agreement was made on attractive terms which should lead to high returns for Applus+. K2 is a really good fit for the division and its core strength and proprietary technology to monitor and analyze environmental impacts in air, water, noise, and soil quality. We'll expand K2's technology and know-how to Latin America and globally. In the auto division, the performance has been good considering the tough comparable period. In Q1, we had organic revenue down 1% due to the prior year period having the benefit of additional revenue from the backlog post-COVID. In Q2, we had 4% organic revenue growth, which was a good result, including some pricing benefit. Margin improved 15 basis points coming from operational leverage in the division and a slight positive mix of contracts. We purchased a company with three stations in Madrid, cementing our strong position in the region in Spain. Madrid is a free market, and now we have nine stations there. We benefit from good operational and marketing synergies that deliver good margins. The surprise decision of the government to end our Costa Rica concession was unfortunate. We own 44% of Costa Rica, so in net profit impact, the net profit impact is much less than the operating profit impact. Although our renewal track record is extremely good, it does, nevertheless, highlight the risk we face with these very large auto contracts. The other four individual governmental contracts in this division that have more than EUR 3 million in annual adjusted operating profit each are Ireland, Galicia, Catalonia, and Valencia. Ireland and Galicia have been recently renewed. Catalonia is a long-term authorization to 2035, although we are still waiting for the government to modify the program. That might result in some market share loss. Valencia, we have been informed of the government decision to end the outsource program as they intend to manage it themselves. It ends at the end of this year. Revenue in 2021 was EUR 12 million. We will continue to bid for new concessions and renew existing ones because they generate very high return on capital. Finally, to emphasize that we do have some interesting opportunities here. We have just started operations in Mexico and Ecuador is ramping up, and we have larger opportunities in emerging markets that we are currently studying. Out of the four divisions, the strongest organic revenue growth has come from IDIADA with an impressive 17.7% organic revenue growth. We had 15% in Q1, and this accelerated to 20% in Q2. Please, don't model such high growth rates in the second half, and remember that last year we had a strong H2 recovery. Like all four divisions, there is some price inflation in here, of course, but the majority of this growth has come from the strong demand for the testing and support around new technologies in cars. Electric vehicles, hybrid vehicles, autonomous and semi-autonomous vehicles, and advanced driver assistance systems are all being heavily invested by the auto manufacturers, and these all require exhaustive testing and certification prior to production. Approximately 13% of our revenue in this division comes from China, which did not impact the division numbers. We still had growth from our China business in Q2, and this is due to the good spread of operations, not all were in lockdown, and the fast recovery from those areas that were affected. We had a good increase in the margin in the first half as well, and this was largely due to the improved volumes at the proving ground we have here in Catalonia, which operates at a high incremental margin. As usual, we also show here the margin if we didn't have to perform the accelerated depreciation on the assets. We show the underlying margin of the operations would be around 12.4% now. Finally, an update of the tender for the concession. The intention of the Catalan government is to launch the tender at the beginning of 2023 and finalize the tender the same year. That is the latest information we have on this. Now to present the last of the four divisions, Laboratories. Laboratories had a very good second quarter revenue growth, accelerating to 11.6%, from 6.3% in the first quarter. The mega trend drivers we talk about at the Investor Day last year are supporting the growth in this business. With all things electrical and electronic and connectivity requiring a lot of testing and certification. Margin was down. We had very strong margin last year in this division, with everything going well. This year, we have got the impact of the China lockdown, which means we carried full cost there with a period of no revenue. We have also suffered higher energy costs for the labs to carry out their testing. We should see some margin recovery in the second half, but it will not reach the levels of the second half of last year, which was 18%. Finally, for labs, as you know, this is the division that we aim to double the size. It doubled from 18- 21, and we are targeting these aims from 2021- 2024. We made three acquisitions so far this year, two of which were in cybersecurity assurance and certification, which, as you can imagine, is a fast-growing industry. We have many years of experience in this field, but for high-level assurance, like for payment systems, identification cards, or even passports. The rapid growth is coming more from mid and low-level assurance, which includes all types of products and systems that have microchips and are connected to the internet. This includes the systems in cars and consumer products. Metrology, with a small acquisition in Spain to further consolidate our strength in this market and benefit from the cost and revenue synergies we can get from having a national network. We remain very disciplined with these acquisitions. We are aware of our own valuation and benchmark this to the companies we purchase. I'm convinced we have the right capital allocation strategy, balancing these deals with our shareholders' remuneration strategy. Now, for the outlook slide, it is the same as we said at the Q1 results. Mid to high single-digit organic revenue growth and margin to improve by between 30 and 40 basis points. The margin impact from the loss of Costa Rica, we expect to recover through the continued good performance of the business and new efficiency plans. We have the inorganic strategy to overlay on this. We will continue to make acquisitions at a good price that have a good strategic fit and align with the strategic plan to improve the quality of the portfolio of services. We are also making good progress in our asset portfolio rotation strategy to divest lower-margin and low-growth business units, where we'll give you a picture of meaningful developments in the coming months. Before I turn to the Q&A, I have a couple of slides to take you through where I personally will be very focused, aligned with the strategic plan to accelerate value creation. This is a summary of the strategic plan focus and the financial targets. The evolution of the portfolio towards higher growth in markets that are more long-term sustainable and aligned to the key global mega trends that we can mostly benefit from, like energy transition, electrification, and connectivity. The acquisitions we have made in the last two years in cybersecurity, in environmental inspection and consultancy, in construction, metrology, and renewables fit this strategy. Our internal investment and focus likewise has been in these higher value areas. We remain present in the oil and gas segment, but this will be a smaller part of the overall business and focus on segments and regions where we can extract better returns. We are increasing every year our focus on all areas of ESG, ensuring we have business positioning to support environmental drivers and increasing our own sustainability credentials. Finally, we are conscious of the poor performance of the share price. I'm convinced that delivering on the plan with the expected continued strong financial performance of the business will unlock the share value embedded within the group. At the bottom half of this slide are the financial targets we set out in November last year. Where we are after six months of the plan, I think very well, with one major setback, which was the loss of the Costa Rica contract. We have to recover from this lost profit and move on. We have made five acquisitions so far this year, aligned with the strategy, investing just under EUR 70 million. We are well advanced in our divestment process, and I hope to make an announcement on this soon. We have completed the 5% share buyback, investing EUR 53 million. ESG, every day is becoming more stringent in our operations, both as a revenue driver and the way that we manage our business. 2022 is the first year on having specific ESG targets formally linked to our variable remuneration. We had another ESG rating performed on the company from S&P Global, which was very strong. We now have a strong ratings from all the major agencies. For the financial targets, the performance we have had for the first half and the outlook we have for the year is in line. What I intend to do first is focus on two key areas. As the inorganic strategy is so important for us, I'm going to step up the focus on making sure we get fast and efficient integration of the companies we buy, and make sure we deliver the expected revenue and cost synergies that we were expecting. Secondly, also on the inorganic strategy, we have management dedicated to the investments since this is an important area that has a lot of value embedded in it. An additional actions I intend to take is increasing the focus on margin improvement. To do this, I have already appointed a new operational excellence Senior Vice President with the objective of having a more leaner and efficient organization and introducing additional efficiency plans. I have only been one month into the CEO job, so it is still early days for me, but I am super energized and motivated to continue the good work done under my predecessor and take Applus+ onto the next stage of a journey. I am focused on delivering the plan, enhancing it where I can, and improving the shareholders' value. With that, I now hand you back to the operator who will manage the Q&A. Thank you. As a reminder to ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. Once again, please press star one and one if you would like to ask a question. We will take our first question. Please bear with me. Your first question comes from the line of Kate Somerville from UBS. Please go ahead. Your line is open. Hi. Thanks for taking my questions. First question is on the recent recovery in the oil and gas part of your business. Firstly, does this change your view at all on the businesses that you want to dispose? You have potentially the ones that you wanted to get rid of actually now probably look a bit more attractive. Secondly, on a similar line of thought, has the sort of recovery in oil and gas changed your view on the midterm outlook? I think currently it's low single-digit. Do you think that may be too conservative? My third question is on what is your current level of utilization in the labs in China? Is this why you don't expect the margin to return to 2021 levels? Thanks. Thank you, Kate. No, we have not changed our view. You know, our strategy is clear. We want to reduce a little bit our exposure to oil and gas, investing in end markets, more sustainable, less cyclical, higher margin, etc. This is what we want to do. Having said that, we'll continue working in oil and gas. We'll continue being one of the key players there. You know, we'll maintain mainly all the business that we have, mainly in the OpEx, less cyclical, where we can have significant competitive advantages. In the regions where you know, the margin is quite low, very focused in a few customers, maybe low margin, et c., you know, we don't really want to continue operating. On the other hand, we don't really see a significant change in order. As I said, during this first half, OpEx has performed extremely well. Most of the growth in absolute figures comes from OpEx. That is quite resilient. We always said that in this 2022, we were expecting to be at the levels of 2019. Unfortunately, we'll be even above. In the case of CapEx, it's true, there are some opportunities. This first half, we have had a few opportunities. Remember that last year we end the year with not more than EUR 80 million in CapEx. It means that when we are talking about, you know, double-digit, it means that suddenly if you watch one project, automatically the growth is quite significant. We don't really see the situation of the CapEx oil and gas as it was a few years ago, that we had significant projects, I would say, in new construction pipelines, for instance, in North America, on subsea projects in Africa. We don't really see. Our strategy will not change. Therefore, you know, we maintain, as we said, the guidance for this second semester. Regarding China. In China, we are at full. One of the points that I mentioned is that we expect to recover part of the margin in the second semester. Since we're in labs, we almost had a couple of months closed labs. Unfortunately, we'll not have enough capacity in the second semester to offset all the gap that we have, that we are doing this couple of months. Right now the utilization it's at full. The key problem is that we will require more capacity to offset all the gaps. Very helpful. Thank you so much. Thank you. We will now take our next question. Please stand by. Your next question comes from the line of Pedro Alves from CaixaBank. Please go ahead. Your line is open. Hi, good morning. Thank you for taking my questions. First one, in your 2022 guidance, which seemed to have impressed particularly on margin. Could you perhaps quantify or elaborate a bit more on the new efficiency measures that will help to offset the loss of Costa Rica? Then the second question, with regards to the target of disposals. Do you have now a clear view on the timeline to conclude the deal? And the third one just on automotive. Could you mention good pipeline of opportunities in several developing markets? We know that with the pandemic many countries have not advanced in that front, and governments were not keen on launching new tenders. Could you perhaps elaborate a bit more on the kind of opportunities that you really see in the short to mid-term, any negative pipeline of the size of the contracts that will probably hit in the market and they will try to beat? Thank you very much. Thank you, Pedro. Regarding your first question, yes, we maintained the guidance in terms of margin despite of this impact in Costa Rica. We are always working in efficiency plans. Right now we already have several plans in several companies around the world in Energy & Industry. Just to let you know, for instance, we have a clear plan in Australia and Germany and some Middle East countries, etc. In the case of labs, even in certain aspects in North America. As you know, for instance, in the lab division, we have both several companies in North America, and there's an opportunity to get more synergies in the back-office aspect there. I mean, we have constantly different efficiency plans to develop. What we expect is that this year, obviously, we try to speed up as much as possible in order to, you know, to offset the gap that we have had from Costa Rica. Regarding the disposals, the reality is that all the plan that we had about the disposals is on our schedule, so it's what it is. These projects are not easy, so a disposal is even more difficult than acquisition. Right now we are in some of them very well advanced, and I hope to, you know, to communicate something quite soon. Quite soon means I hope to be able to communicate something in Q3. You know, in this quarter, I think we should be able to already announce something. Anyway, this is, it's like M&A, it's quite binary. Until you don't really have everything signed, you know, everything can happen. I think, you know, it's most likely we should be able to communicate something during Q3. You're right about the auto opportunities. I think we are extremely happy because the reality, as you said, after COVID, there are a lot of opportunities moving mainly in emerging markets. Remember that we always mentioned that there was opportunities in India, where we already had an agreement with one state, Goa. Unfortunately, due to the COVID, everything was delayed. Right now, everything is moving around, and also we are in touch with other states in India. India should be one of the key geographies in the medium term in the auto. There are others. I think in Middle East there are other opportunities. I think in Latin America and Central America, there could be others. I feel quite optimistic that, you know, in this division, I think emerging markets in the period of two-three years, we could have certain good news. Thank you very much. Thank you. We will now take our next question. Please stand by. Your next question comes from Sylvia Barker from JP Morgan. Please go ahead. Your line is open. Hi, good morning. Could I firstly ask on IDIADA, just to understand two things. First of all, I guess there was a period when obviously there were lots of restrictions and you were just not seeing clients gonna use your facility, and they have switched to in-house or other options. Have you seen some catch up now? You know, is some of that acceleration, I guess, them reducing the use of their in-house facilities again, and using yours more, or is this all kind of new demand? Then you make a comment that EV is now, EV and hybrid is bigger than internal combustion within revenue. Maybe can you comment as a proportion of that 20% growth in Q2 how much is traditional, that's internal combustion vs. The rest? I had a question on the margin for oil and gas, OpEx as well. Could you give us an idea whether you expect that to catch up with the division at any point soon or whether you expect that to continue to be dilutive? Finally on cost efficiencies, it sounds like you're just embarking on that now, but any preview on what shape might that take? Would it be a more focused cost savings program, or would it be just being more efficient across the board? Thank you. Yeah. Thanks, Sylvia. Regarding our area, the reality is that after COVID, a lot of customers were tending to come back to our facilities here in Catalonia. The reality is that demand is extremely high. Just to let you know as an example, in the first half, in number of hours, we have been below the first semester of 2019. Just to let you know that for instance, in the month of June, was the first month that the number of hours in number of hours we have not been below the first semester of 2019. Just to let you know that for instance, in the month of June, was the first month that the number of hours in June, we were already above, you know, the level that we had in June 2019. It means that the recovery is quite strong. Remember that in IDIADA, when we sell proving ground, we have, as far as I know, something like 14 different tracks. There are a few that, you know, that are quite high demand. For instance, you know, for the autonomous driving, for handling, etc. There are some tracks that are at full in this moment. I think it's recovering extremely well, and I think in the coming months, we'll continue. Right now, in terms of the EV, if I'm not wrong, I ask and correct me if I'm wrong, I think EV in IDIADA is around 52%. Well, EV and hybrids is 52% of the total revenue of IDIADA. It's growing extremely well. Okay? We are investing on that, and it's performing well. Obviously, you know, combustion is decreasing a little bit. Anyway, it's the way that this operates in the OEMs. This is something that we are fully adapted, and we can provide all the services that the OEMs requires. Regarding margins in oil and gas, the margin in oil and gas is slightly below the average of the division. The rest of the end market is above. Obviously, this is something that impacts us in the margin within the division. This last semester, for instance, that oil and gas has been growing a little bit more than the rest. This is something that is impacting us. I think in the three year plan, what we said as a target is that we were expecting to have a margin in oil and gas above 7%. We are still below that, but this is the target, you know, that we have internally for next couple of years. You know, your last question about the cost efficiency. For me, it's easy. What I want is to improve, you know, the D&A, the mindset of operational excellence within the group. I have obviously some ideas. We got just starting, you know, the new Senior VP has been just appointed. What I want is to continue it, for instance, a lot of aspects that we have done during the last period in terms of digitalization to make sure that we improve the field force automation with all the people within Energy & Industry, maybe a little bit more remote inspection. I think we already have financial services, but this is something that we could continue reinforcing. ERP harmonization, SAP is our key SAP. I think there is still some opportunities and mainly with all the acquisitions that we are doing. On top of that, I see some cross-divisional opportunities, mainly in the back office aspects in regions where we already have certain critical mass, optimize as well the procurement department. Anyway, I think we have several ideas that we obviously have to continue working. We have just starting, but I'm convinced that this is something that, you know, could help us in order to continue improving our margin position. Okay. Thank you. Kate, just to come back on the IDIADA electric vs. Combustion growth. All that growth came from electric vehicles and hybrids, and the revenue from combustion engines are actually decreased. All from electric and hybrid, and presumably would come as no surprise to you. Yes. No, exactly. That's useful. Thank you. Thank you. We will now take our next question. Please stand by. Your next question comes from Pablo Cuadrado from Kepler. Please go ahead. Your line is open. Hello. Good morning, everyone. Just a few questions on my side. The first one is, I was wondering if you can give a little bit more detail on the Chinese impact on the lab division. Clearly +9% organic revenue growth in Q2, in H1, sorry. Clearly there is the impact on the two months lockdowns. If you can share with us a little bit the revenue impact and probably a reference drop through into the margin, just to understand how good the results could have been, excluding this impact. Second question is on the working capital. Sorry, because I'm not sure if I missed, you made some comments on. I was wondering if you can also tell us which is your expectation for year-end. I recall that last year there was a little bit of recovery of working capital during H2. Is more or less the same procedure that you expect for this year when compared to the account or the release of working capital that you have had in H1? The last question is on the buybacks. I think you have perfectly explained that clearly, probably the process didn't have the benefit that you were expecting to support the shares, but clearly it's going to have that question. I was wondering whether you may consider to probably implement a new plan or if the shares are not reacting in the next few quarters or anyhow if you expect that any decision on that point is not going to come until next year. Thank you, Pablo. Well, regarding China in the labs, I think the Chinese business in the lab is around 7% of the division. Overall, annually, more or less, we have around EUR 11 million, more or less. You can do your own math. We have been almost one month and a half closed. Obviously, you know, at the beginning we could offset a part of the gap, but anyway, you can do your math, more or less around EUR 1 million is what we have had. In terms of working capital. Well, working capital, as you know, the seasonality that we used to have is that normally during first quarter and second quarter is when it's increasing. Normally Q3, you can expect the working capital variations a little bit flat or increasing a little bit. Normally due to the seasonality in Q4, it reverses. I'm expecting, it's too soon to say, but you know, around the working capital variation for the whole year between EUR 15 million and EUR 25 million. This is what we should have. Right now, I would be more in EUR 15 million-EUR 20 million, and this is what we are expecting. Another important point in terms of working capital, you know that the division that requires more working capital is Energy & Industry. By the way, it is one of the ones that have had a significant growth, and this is also impacting us. Working capital continues being in a very good shape, is not more than 5% of our revenue right now at mid of the year. At year-end should be between 3%-4%. Regarding share buyback, well, you know, capital allocation is one of the key topics always at board level and is on the table, and we are constantly analyzing. At the end, as we always say, you know, it's a, it's a combination of share buyback, of the investment that we are doing both in organic and inorganic. Right now, as you know also, we are in the process of this divestment. We are constantly analyzing and, you know, it depends in the future. Our leverage is where we are, which is 2.7x. You know, we'll continue analyzing, and we'll see if at one stage we consider that makes sense to go more or not. Right. That's very clear. Thank you. Thank you. Your next question will be announced shortly. Please bear with me. Your next question comes from the line of Álvaro Lenze from Alantra Equities. Please go ahead. Your line is open. Hi. Thanks for taking my questions. I have two. The first one would be if you could run us through the impacts of inflation for this year and for next year, maybe more from a conceptual standpoint. So the growth that we are seeing organically is. Are you already increasing prices to reflect the inflation and the margin expansion is due to your wages, which is the main cost component, not still reflecting this inflation? Or is this margin expansion purely due to higher volumes and operating leverage? And how should we think about this going into 2023, when presumably the collective bargain agreements will start to affect especially wages in Europe? The second question would be, I believe you and you've mentioned that you will likely retain parts of the oil and gas business where you have a stronger positioning and so on. My question is whether the current exposure to oil and gas and the ability to be a global company with a higher reach has some synergies within the industry, and whether selling parts of the oil and gas could have some dyssynergies within the oil and gas industry. Maybe due to being unable to provide global coverage to some clients or more difficult in recruiting or in investing in technologies. What's your thought on that? Thanks. Thanks, Álvaro. Well, regarding the inflation, what we have said is that more or less we estimate between 2.2%-2.5% in terms of pricing during the first semester. I would say in cost has been slightly higher, so I think more or less 2.8% or slightly below 3%. It means that the price increase has offset the cost increase. When you say the impact in margin, I think the margin comes from the volume, from the efficiency that we're having. I'm afraid that right now what we are doing with the price increase is that we are offsetting the cost increase, not much more. It means that if the revenue is increasing, even this inflation could impact a little bit negatively to the margin. You know, I think the margin improvement is real and operational margin improvement. You say, what do we estimate for 2023? Honestly, Álvaro, I think it's too soon to say. Right now, there is so much uncertainty to know exactly what will happen with the energy, what will happen with inflation. If finally, you know, we'll maintain at this level, it could be lower. It's a question mark. Right now, I don't feel comfortable saying that inflation or the cost increase that we have in 2023 will be whatever. I don't really feel comfortable right now. I need to have more visibility. There's so much uncertainty, you know, after summer, etc., that right now talking about 2023, honestly, I don't feel comfortable about it. Regarding oil and gas, well, just to clarify one important thing. We always said we cannot divest oil and gas, but we can divest this business in some regions because the reality is that, you know, the business that we are having operating different end markets are quite embedded. It means that what we can divest is a specific country or region rather than just the oil and gas. Regarding about what you mentioned, you know, to have this global coverage, well, it's true that maybe with some customers it would be much better to have a global coverage. I think, you know, based on what we are analyzing a potential divestment in some specific country, etc., I think this is not an issue. We can continue, you know, providing a very good service to the customer despite of not having presence in one or all the countries. I'm not really worried about it. Okay, thanks. Just a follow-up, maybe if I may, on the inflation side. I understand that visibility is still too low, but do you expect to continue regardless of whether inflation is a bit higher or lower? Do you see any issues in continuing to pass through this inflation to prices going into 2023, regardless of this level of inflation? Well, we have, Álvaro, so you know perfectly, we know, you know, the margins that we are moving, so you know, we have to pass the inflation to our customers. Otherwise, we have issue obviously. We know this price negotiation. You know, it's a negotiation. You know, maybe you can try to get more share within the customer, etc. Obviously, this is a must. We have to. We cannot operate in a different way. Okay. That's very helpful. Thanks. Thank you. As a reminder, if you'd like to ask a question, please press star one and one. We will now take our next question. Please stand by. Your next question comes from the line of Paul Sullivan from Barclays. Please go ahead. Your line is open. Yeah, morning, everyone. Just to follow up, back on inflation. Where you do have visibility into the second half, should we expect it to be a bigger contribution to growth in the second half from the first half? Then can you remind us of inflation proofing in auto, across the auto contracts where you're selling to consumers? Then when it comes to asset sales and the potential for earnings dilution as we work through some of those, have your thoughts changed as maybe profitability's improved? How should we be thinking about earnings dilution from asset sales as and when you announce them into next year and how you intend to offset it? Thank you. I think, Paul, regarding the inflation, what we estimate for the second semester is that could be slightly higher. We said that in the first semester was 2.2%-2.5%. I'm afraid that in the second semester will be slightly above 2.5%. What we expect also is that we should be able to increase pricing and offset the cost. Regarding auto, just to let you know that for instance, in auto, around 50% of the business, we automatically adjust the price based on the CPI. Around 30% is a free market, so we can manage, but obviously it depends on the competitive environment. There's another 20% that there has no price increase, and there's another 10% that you have to negotiate with the governments. Just to let you know that in this first semester, the price increase and also the cost increase that we have had in auto is a little bit slightly above the average of the group. In any case, in auto, due to this price adjustment, and on top of that, the high profitability inflation is not really bad for auto. Your second question, Paul, was on the disposals. Yeah. That the businesses have increased margins, better profitability. How do we offset this next year? Yeah. No, good point. What we said in the three-year plan is that the disposals should allow us to increase margins significantly around 70 basis points or something like that. We expect to do something in this 2022. This is something that, you know, should help us a lot during this year. Does that answer your question, Paul, on the second one? Well, the thinking hasn't changed. I mean, they're still the, you know, the assets you're selling are still way below the group average margin, clearly. Yeah. Yeah. Yeah. We're not seeing substantial improvement there. Our thinking about the potential dilution and how you offset that doesn't really. Your thinking there hasn't really changed. We haven't got a big hole to fill. Should we be thinking about you getting better prices for the assets that you're selling now as well? No. I think more or less the impact that we estimate is maintained. No significant changes. Okay. Super. Thank you. Thank you. We have one further question in the queue. Please stand by. Your question comes from Gonzalo de Cueto from BNP Paribas Exane. Please go ahead. Your line is open. Hi. Good afternoon, Joan, Aston. Thanks for taking my question. Just one last from my side, and it's about IDIADA's tender. Do you know what was the reason behind the delay on the start of the tender? And also, has there been any update regarding change in conditions or any material consideration that could be relevant in terms of your competitive stance regarding the upcoming tender? Many thanks. Thanks, Gonzalo. No material change. The reality is that to organize the tender for IDIADA is not easy. I think what's happening is that the Catalan government right now is aware of the complexity to organize this tender. Unfortunately, you know, this is something that for them right now they are realizing how difficult it is to organize, and this is the reason why it has been delayed. Having said that, I think they are right now they have the commitment to do it. You know, they want to have a draft of the tender conditions at the end of this year. This is the reason why we think that they will launch the tender at the beginning of this of 2023. This is what they told us. They are also expecting to have the winning, I would say, at the end of 2023. No, any reason for the delay rather than, you know, the complexity and difficult to organize this tender. Regarding the condition, I don't know the condition, the tender conditions. We don't really know. I'm sure that there will be some economic aspects, but I think the technical aspect will be also quite critical because for the Catalan government, IDIADA is a very strong asset that they have here in Catalonia. They want to make sure that from a technical perspective, you know, the new operators operate in the best way. No, we don't really know any detail about it. Understood. Many thanks. Thank you. There are currently no further questions. I will hand back to Joan Amigó for closing remarks. Okay. Well, thank you everybody for listening to the presentation. Obviously we are very happy with the performance that we have had this first semester, and we expect, you know, to continue in this second semester. In case if you have any question, let us know. Obviously, you know, our Investor Relations is at your disposal. Thank you. Have a good day. Thank you. This concludes today's conference call. Thank you. This concludes today's conference. Connect speakers please stand by.