InterContinental Hotels Group PLC
Q4 2014 Earnings Call Transcript

Published: 17 Feb 2015

[Operator:]

Good morning and good afternoon ladies and gentlemen, and welcome to the InterContinental Hotels Group Full Year Results 2014 Conference Call. My name is Wendy, and I’ll be your coordinator for today’s conference. Throughout the presentation you will on listen-only. However at the end of the call there will an opportunity to ask any questions. [Operator Instruction] I am now handing you over to David Kellett, Head of Investor Relations to begin today's call. Thank you.

[David Kellett:]

Good morning, everybody. This is David Kellett, Head of Investor Relations, IHG. I’m joined this morning by IHG. I am joined this morning by Richard Solomons, Chief Executive and Paul Edgecliffe-Johnson, our Chief Financial Officer. Before I hand over to them for the discussion of our results, I need to remind you that in the following discussion, the company may make certain forward-looking statements as defined under U.S. law. Please check this morning’s press release and the company’s SEC filings for factors that could lead actual results to differ materially from any such forward-looking statements. I’ll now turn the call over to Richard Solomons.

[Richard Solomons:]

Thank you, David. Good morning everyone, and thank you for joining us today. Welcome to our 2014 full year results conference call. Before I hand over to Paul I’d just like to start with some highlights and perspectives on the market. 2014 was an excellent year for IHG and we delivered a strong financial performance which Paul will talk about in more detail shortly. We made excellent strategic process, we acquired Kimpton, opened the first EVEN hotels in the U.S. and just last week opened the first HUALUXE Hotel in China. Alongside this we developed our more established brands achieving many growth milestones across the year. And our disciplined approach to capital source should turnover $1 billion to shareholders in the year. So where’s the hospitality industry today and what’s the outlook? As we have seen for many years now tailwinds for the sector remain very favorable, demand continues to be driven by global GDP growth, increasing disposable income, demographic, the globalization of travel and the growing number of outbound travelers from emerging markets. The industry is also becoming increasingly branded driven by both consumers and the capital markets, and this is the backdrop where our strategy and strength position us well to win in the future, explaining why we have a 13% share of the active pipeline globally with only a 5% share of existing supply. In our largest market the U.S. we continue to experience favorably industry dynamics. GDP growth remained strong driving demands to record levels and supply growth is still considerably below the long-term average, driving strong RevPAR performance. However, today’s macroeconomic environment outside the U.S. seems to be more uncertain and variable than it has been for a little while with an unfortunate mix of falling oil prices, strengthening U.S. dollar, heightened potential for Eurozone crisis, continued terrorist activity across the Middle East and the scepter of a parliament in the UK. Having said that as we look into 2015, we are confident we will continue to deliver again to our strategy and the strong momentum in our business positions us really well to continuing our performance. So I’ll now hand over to Paul.

[Paul Edgecliffe-Johnson:]

Thank you, Richard and good morning, everyone. We’re pleased to report another year of strong financial performance, with growth in fee revenues across each of our four regions, as global demand for hotels operating under IHG’s brand increased once again. This led to further increases in occupancy, which across the year averaged 69.1% the highest we’ve ever experienced. We increased average rates by 2.7% in large due to optimizing our guest mix, which has driven comparable revenue per available room up 6.1%. Across the year net room count increased by 3.4%, with most of this growth driven in the fourth quarter. We opened 41,000 rooms and removed 18,000, representing 2.6% of our opening balance as we continued to focus on optimizing the long-term attractiveness of our brand. In aggregate our RevPAR and net rooms growth allowed us to increase our fee revenue by nearly $100 million to $1.3 billion. Each of our four regions increased our fee revenues with a particularly strong performance from Greater China, which was up 9.5% in spite of the more challenging RevPAR we are seeing there. As in previous years the year-on-year comparability of our total revenue and operating profit are distorted by the impact of owned hotel sales, significant liquidated damages, the performance of managed leases and foreign exchange movements I will therefore focus on our underlying performance using constant 2013 exchange rates, as this gives the best explanation of our financial out term. We converted our strong fee revenue increases into 10% underlying profit growth through capital cost management and our continued focus on concentrating resources into those priority markets where we see high returns and long-term growth potential. Nearly 90% of our 2014 room openings were in these locations. I talked last year about our desire to maintain an efficient balance sheet and net debt closed the year within our target leverage range, following the special dividend paid in July with our interest charge increasing accordingly. Our effective tax rate increased by two percentage points to 31% and average shares outstanding declined following the share consolidation midway through the year and the completion of the share buyback. In aggregate this enabled us to increase our underlying earnings per share by 12%. I will now talk through the performance in each of our regions in more detail. Firstly the Americas where demand in the United States has been at record levels, for 46 months [ph] in a row. We’ve driven occupancy to levels just short of our prior peak in 2006 and increased rates by a further 3.5%. In addition to nearly 8% increase in fee revenues we saw a strong performance from our small number of remaining owned assets particularly at Holiday and Aruba following refurbishment, leading to an overall increase in underlying revenue of 10%. Underlying profit was up 8% with the devaluation of the Venezuelan Bolivar a $3 million headwind and reported overheads increasing by $12 million partly due to $4 million of additional development cost driven by our strong financial performance and an unusually high level of large claims in our Healthier Kids [ph]. The refurbishment of InterContinental New York Barclay is progressing well and the hotel is expected to reopen in 2016. We incurred cost of $5 million in relation to our 20% joint venture share of the hotel’s operating expenditure and we expect to incur a similar cost in 2015. Our net rooms growth of 1.9% was our best in the region for five years. With the further strengthening of the U.S. lending market and a high level of investor interest we continue to see strong demand for our brands. We increased our signing by over 10% last year and with over 90% of our high quality pipeline expected to open in the next three years our growth prospects for the Americas continue to look attractive. Moving on now to Europe where we have benefited from our long-term disciplined focus on priority markets in key cities, which together contribute 85% of our fee revenue. The improving economy in the UK drove high occupancy across the board with double-digit RevPAR growth in the provinces driven by rate, which still remains well below the prior peak in real terms. Germany benefited from continued growth in domestic economic output and a rise in employment, which allowed us to achieve steady growth in both occupancy and rate. We signed 2,300 rooms there, the highest we have ever achieved in this priority market. We have invested in local development resources and deployed recyclable CapEx in what is historical been a difficult market to achieve asset light growth in and are starting to see results from our approach. Total underlying profit in Europe increased by 3% suppressed by the refurbishment of InterContinental Paris Le Grand in the first half and the difficult trading conditions in Russia and the CIS, which are expected to continue this year. We have recently streamlined our mainstream Europe managed business, which will result in the transfer of most of our UK managed hotels to franchise contracts. The new structure will both bring greater efficiency to our UK business and allow us to expand our brands more easily. Moving now to Asia, Middle East and Africa, our most geographically diverse region where Japan, Australia and the Middle East contribute around 65% of our profit. But we see excellent long-term growth opportunities in developing markets such as Indonesia. Our focused development strategy continues to deliver strong growth with 4,200 room openings in the year, of which over 1,000 rooms opened in both India and Indonesia. In support of expansion into markets such as these, we are investing in additional local market development resources. Moving to Greater China where we continue to lead the industry and are rapidly delivering on our strategy of building a domestic hotel business. Against the backdrop of more muted industry growth with the Chinese government austerity measures continuing to impact the industry, we still grew comparable RevPAR by 1.6% with our brand strength and operational excellence led to industry outperformance with 2.5 percentage points. Total RevPAR decreased by 3.4% due to new openings in lower than average RevPAR markets. We opened 11,000 new rooms, our most ever, more than doubled that for our international competitor. This helped to drive net rooms’ growth of 14.1%. Our scale position in China means that in Tier 1 cities we are already the largest international player and we are leading the way in Tier 2 and Tier 3 cities, where we have strongest pipeline and the long-term opportunity is greater. Nearly two-thirds of our Holiday Inn brand family room count is now in these markets. Demand growth in these cities is high and by 2022 over 80% of the fast-growing Chinese middle class are expected to be in these locations. Whilst as we are the biggest international hotel company in the country we only have a presence in a quarter of these markets. Our 2014 underlying profit growth in the region is somewhat flattered by a number of individually small one-off upsides totaling $5 million, which will not repeat. This was largely contracted by trading at InterContinental Hong Kong where the redevelopment around the hotel and local protest affected demand. The construction work will continue in the medium term so trading is expected to remain at the reduced level. To allow us to continue delivering strong growth in the region and to recruit and train the required level of staff we’ll be investing an additional $5 million into the China managed business from this year. I’ll now talk a little bit about our fee margins and then capital allocation. The increase in margin was slightly higher than usual in 2014 with growth of 1.5 percentage points helped by the stronger than expected U.S. RevPAR environment and performance in Greater China, which benefited from the previously mentioned one-off upsides. Given the recent strengthening of the U.S. dollar and our distribution of revenue and costs, we expect foreign exchange to be a translation headwind on reported margin this year. There are more details in the announcement on the presentation we gave in London this morning. But I just want to flag that the impact of FX translation on our 2014 operating profit was around $9 million and using current rate, the impact would be a further $7 million. Considering this and our focus on reinvestment in the next few years we expect to keep our margin growth more closely aligned with our long-term trend of around 1 percentage points per annum. Moving on now to our disciplined approach to capital allocation. We remain committed to maintaining an efficient balance sheet, with an investment grade credit rating. We believe this equates to a net debt to EBITDA of roughly 2 to 2.5 times and having started the years at around 1.5 times, we are now close to Kimpton acquisition at 2.6 times, a level we are comfortable at in current economic conditions. We will continue to reduce the asset density of the business and in the fourth quarter we formally accepted the offer of EUR330 million at InterContinental Paris Le Grand. The transaction is currently going through EU anti-trust approval and we expect to receive proceeds in the first half of 2015. In line with our usual practice only when funds have been received will we comment on their use. Our strategic review of other major owned assets is still ongoing. We generated significant cash from operations, which we then use to invest in the growth of the business. We made growth capital investments of $271 million, which is just over $200 million on a net basis after recycling. Whilst our medium-term growth CapEx guidance of $350 million remains unchanged, I expect that overtime our net investments will be much closer to our permanent maintenance capital key money of around $150 million. Disposal proceeds and the regearing of the balance sheet generated further cash inflows last year which enabled us to distribute over $1 billion to shareholders. Our strong underlying results mean that we are proposing growth in the final 2014 ordinary dividend of 11%, which will result in full year ordinary dividend growth of 10%. This is in line with our consistent sustained growth over the last 10 years and reflects the confidence we have in our business model, while remaining very alert to the short-term challenges that exist in some of our markets. And in conclusion, we will continue to maintain this disciplined approach going forward, with the aim of striking the right balance to and investing for growth and returning funds to shareholders. I will now pass over to Richard, who will talk more about our strategic progress in the year.

[Richard Solomons:]

Thanks, Paul. As I said earlier on 2014 was an excellent year for IHG and we made really good strategic progress. In the context of the changing microeconomic environment I talked about earlier our proven strategy has put us in a position of strength. In 2014, we continued to focus on enhancing our portfolio of preferred brands as well as investing in technology and the digital elements of the guest journey. This runs across all our brands and we pioneered in this space, I will return to it later but first of all I will talk about the progress we are making with our brands. I have spoken many times about the in-depth research we undertook to look at the universal guest need indications, a vital underpinning that continues to advantage us in the marketplace. Understanding those needs informs how we evolve each brand experience as well as how we build our portfolio in order to build trusted and long-term relationships with our guests. The Holiday Inn brand family continues to be IHG’s engine for growth. It is the largest hotel brand family in the world with a largest pipeline and the brand’s universal appeal is demonstrated by the fact that it’s the only mainstream brand with the meaningful presence on a global scale. In the past three years Holiday Inn Express has entered nine new countries and the brand family now has nearly 750 open properties outside the U.S. and over 250 in the pipeline. At the same time we continue to strengthen our position in established markets. In Greater China for example we celebrated the openings of the 50th Holiday Inn Express with the further 50 in the pipeline. Innovation and the guest experience has been a key factor in Holiday Inn’s longevity and growth. We successfully rolled out our open lobby concept across five countries in Europe and continue to transform our food and beverage experience. This is delivering strong financial performance for owners with year one returns of around 20%. In the U.S. we are piloting a new restaurant concept, Burger Theory. At our initial pilot location at Atlanta, the hotel saw a greater than 30% increase in its food and beverage revenue and the concept’s now on offer at 15 hotels and is being rolled out further. We also launched a new branded room design solution for Holiday Inn Express in the U.S. and Canada. The first hotel that we opened in Salt Lake City just a few weeks ago, master design is not yet mandatory but 80% of hotels that started renovation projects at 1st of November have signed up for it. Moving now to InterContinental our international luxury hotel brand, with double the size of its nearest competitor the brand has unrivaled scale and delivered another strong year of openings and signing. WE opened flagship properties in Sydney and Lisbon and have made two recent landmark signings in the U.S. in high barrier to entry strong RevPAR markets. We signed a new luxury property in Downtown LA with 900 rooms and last month we signed an exciting new project in Washington DC with the same owner, [indiscernible] InterContinental. For Crowne Plaza we continue to strengthen the brand proposition through our refresh and repositioning. This is not a quick process given the third party ownership of the hotels and the need to schedule and fund capital expenditure. Having said that, Crowne Plaza opened its 400th property in 2014 and continues to have great potential for future growth with nearly 100 hotels in the pipeline in 25 countries. 27 signings last year alone included 10 U.S. At our owners conference last November we unveiled our next generation guest room and innovative design to meet the changing need of today’s business traveler. The new room introduces a uniquely angled bed design, an insulated wall panels to reduce noise levels and support a great night sleep one of the brand’s core hallmarks. We’re currently trialing the room with guests in Atlanta. Last week we opened our first HUALUXE hotel out of our pipeline of 24. The brand was designed by our China Team in China to meet the needs of Chinese guest and was based on our extensive market insight, our experience and leadership in that market. The first hotel is located in Yangjiang, a fast developing leisure and business destination with a population of 3 million. The fact that we have not opened in a Tier 1 city highlights that the brand has been designed for domestic not international travelers. I will now talk a bit about our boutique brand Hotel Indigo in Kimpton. Indigo was launched 10 years ago, the first brand in boutique and one of the major hotel companies. It’s a brand that goes from strength-to-strength with excellent momentum in the U.S. where its RevPAR premium to its industry peer group has grown by 20 percentage points in 2010. And our global expansion has accelerated with the portfolio of opened hotel outside the U.S. more than tripling in size over the past three years as the brand continues to attract high quality opportunities in gateway cities. We’ve closed the acquisition of Kimpton a few weeks ago. While still at an early stage our integration plans are progressing well. Since the transaction completed we’ve appointed Mike DeFrino, previously the COO as Chief Executive Officer reporting directly to me. We’ve also retained key members of the Senior Management Team. As I said earlier, our winning strategy is underpinned by investments in technology platforms. So I’ll talk a little bit more now about why -- about how and why we’re focused on digitizing the guest offer. Our approach to technology starts as ever with understanding our guest and their needs across the entire guest journey of dream, plan, book, stay and share. We know the market and have a deep understanding of the current trends that would enhance the guest experience. For example, we look at different demographics and their needs. Baby Boomers are highly interactive they want to talk to people, Millennial on the other hand tend to be much more self-sufficient using technologies to handle the entire period of their stay with minimum human interaction, what we called the invisible traveler. Our priorities around the stay experience through the strategic use of both on property and mobile technology. We then look at across other areas of the guest journey where we can add real value and have a differentiated proposition. I see as a strong record of innovation and leadership in technology. But to continue winning we have to invest smartly to support our plans, while maintaining control over intellectual property and customer data but partner or outsourced where appropriate. To deliver compelling and engaging digital content to our guest, scalable foundation need to be in place, which have the flexibility to handle rapidly evolving consumer trends and this has to be supported by deep data insights and standardized property level capabilities. This framework gives us the foundation to transform the guest experience and make it more interactive through digital content, which we continue to evolve across all of our direct channels. To enable more engagement with our brand at the dream phase of the journey we have new digital marketing capabilities that allow us to target potential and current guest more effectively. We continue to make enhancements in the plan and book stage and in the fourth quarter grew our digital revenue by over 13% materially increasing our direct channel contribution and we’re moving our websites through sponsored brand led designs that better target specific guest needs. I’ve already spoken about the consumer movement towards mobile with our number one app was perfectly positioned. However, we’re not complacent and we continue to evolve our offerings to make it more interactive particularly during the guest stay as part of the journey we fully owned [ph]. In 2014 we standardized on property hardware across all our U.S. states enabled the launch of mobile check-in and check-out. This service is already live in over 500 hotels, will be rolled out across the rest of the U.S. this year and then extended globally. We expect this type of offering to constantly evolve already piloting mobile room key technology that allows guest to completely bypass the front desk when checking into their room. The guest stay goes beyond just the hotel experience. So we’re delivering mobile solutions that support the broader traveler needs. Recently we launched the IHG translator a language which allows guest to travel like a local and as with mobile check-in and out is a free benefit for our most of our members. And our continued focus on mobile, mobile has helped drive bookings up 50% to just short of $1 billion in 2014, accounting for 18% of our digital delivery and this is boosted by the increasing usage of our app, with download growth over 80% in 2014. There are huge benefits from our ability to drive traffic through our mobile app, and experience shows that guests who book through this platform become more loyal and it is the lowest cost channel with no intermediation. To drive even more interactions with these guests we’re piloting beacons in 20 of our hotels in China and expect to launch more boards [ph] in the first half of 2015. Beacons are set up in the lobby and restaurants and allow us to send location tailored notifications and information to our mobile app users. Also rolling out new CRM capabilities which utilize our ISD rule to club members profile so we can deliver more personalized experience of the hotel by understanding our individual guest preferences better. Personalized interaction with the guests is a key part of the future and these initiatives which is true example of how we’re delivering against this need. So to recap, IHG is incredibly well positioned to continue to outperform in an industry that has compelling long-term demand drivers. Over 90% our operating profit is generated from franchisee management contract, but around 85% of these fees link directly to hotel revenues. So rooms growth and RevPAR both important to us we saw our strongest fee revenue growth last year in Greater China was followed by the Americas. This strong momentum into business in 2014 with another excellent year of delivery against our fairly defined strategy. Our brand, one of the largest the most preferred in the industry lie at the heart of this. We acquired Kimpton continue to innovate with the recent opening of the first HUALUXE and EVEN Hotels and further develop our established brands. And we’re building on our history of first innovation technology to support our market leading digital content to meet changing consumer behaviors and sustain our industry leading position. We once again demonstrated our commitment to returning funds to shareholders and we’re focused on continuing to do so into the future. Looking into 2015, we face heightened macroeconomic and geopolitical uncertainties, but we’re confident that our strategy of the high quality growth coupled with the momentum in the business positions us well for continued strong performance. Thank you. So with that Paul and I will be happy to take your questions. Wendy if you please could open the call up for questions that’d be great.

[Operator:]

Certainly, thank you. [Operator Instructions] We do have a few questions already lined up, so I’ll begin with those. Our first question is from the line of Steven Kent from Goldman Sachs. Please go ahead with your question.

[Steven Kent:]

Yes can you hear me?

[Richard Solomons:]

Yeah, hi Steve.

[Steven Kent:]

Okay. So a couple of things, just on the China RevPAR trends can you just talk a little bit more about just because it’s an interesting issue, I mean it seems like you’re building in front of the curve of demand, but maybe the demand pricing is inherently lower in those second or third tier markets although at the same point I thought because there were so little supply in some of these second and third tier markets pricing would be more robust. So maybe just a little bit more color on that and as it relates primarily I would think mostly to your InterCon and Crowne Plaza brands can you discuss the impact of FX on travel to U.S. from Europe or U.S. maybe to Europe just how that is rolling out your expectations there? Thanks.

[Richard Solomons:]

Thanks, Steven. I’ll start maybe Paul can add. I mean look I think in China it’s interesting that our lowest RevPAR market we’ve had the highest fee growth and you know our model and we talk about RevPAR and rooms driving our revenues, what you look going on in China I don’t it’s necessarily us being ahead of the demand curve I think demand is growing significantly in China, but what is happening there is a lot of new supply it’s not all in the branded global branded arena there’s a lot of local brand, there’s a lot of economy product, but I think the fact that our revenues are growing so sharply tells you that there clearly is considerable demand growth. And Paul do you want to maybe give - hold on to RevPAR piece?

[Paul Edgecliffe-Johnson:]

Yeah thanks. So you really need to differentiate between the Tier 1 and the Tier 2 and 3 cities, the Tier 1 cities actually had a good quarter and 2014 was a pretty good year for them. And the Tier 2 and 3 cities where we have built really strong business we’re seeing demand growing at double-digit rates, but supply is coming in as switch that a lot of it is international supply, but it is coming through. So although we continue to grow our occupancy rate was a little harder to keep in the fourth quarter and few other quarters of last year, but it’s building the business for the long-term and that’s what matters. And so we’re very pleased with the performance we’ve seen there. And actually you look Holiday Inn Express for example in China our occupancy for Holiday Inn Express is higher than anywhere else in the world, it shows how well that brand really fits with Chinese consumers and what the Chinese guest is looking for. And in terms of InterContinental and Crowne Plaza and the impact of ForEx on the traveler to be it’s really too early to sort of comment on that the InterContinental brand for us in the U.S. market is not that huge, it’s more of a domestic business for us as we talked about before Steve. But so particularly with InterContinental where Crowne Plaza is more domestic as well and it’s more right across the country. Rich do you have anything to add on that?

[Richard Solomons:]

Yeah just, thanks Paul. Just Steve bang on the [indiscernible] back to China we talked about these Tier 2, Tier 3 cities. These are very major markets, I mean Yangjiang where we’re having our first HUALUXE is 3 million people, Nanchang is 5 million people developing really fast. So I think some has been talked about Tier 2 and 3 people have images of sort of small town and they are far from that. So as Paul said being sort of slightly ahead of the curve getting into these markets being the best locations and being getting first mover advantage is actually very valuable. So we remain very positive about that market.

[Steven Kent:]

Okay, thank you.

[Richard Solomons:]

Thank you.

[Operator:]

Thank you. Our next question comes from the line of David Loeb from Baird. Please go ahead with your question.

[David Loeb:]

Good afternoon, gentlemen. I’d like to see, I was back and forth on between your call and the Starwood call. So I apologize if I’m covering something you missed it’s actually my question is about something you said in the call earlier which I assume you repeated today. Can you just talk a little bit more about the shift from UK managed franchise was the restructuring charge the $45 million related to that? Are you selling pieces of this business or are the contracts just lapping? Can you just kind of explain what’s changed and how it happened? Thanks.

[Paul Edgecliffe-Johnson:]

Yeah I’d pleased to David. In the contract that we signed back in 2005 when we sold these hotels for 1 billion sterling and we signed a long-term management contract. In that contract we’d give some small areas of protection around the hotels, but across quite a few hotels and over the last 10 years we’ve built out our UK business more and more. So as we’ve been looking at where we wanted to build the business. Some of those areas of protection we’re getting in the way. So that combined with the fact that when we look to where we were making our highest rates of profitability it wasn’t in our mainstream UK managed business. So to us that we needed to restructure that so we’ve got a long-term contract again and the brands will stay on the hotels, but they move to a franchise basis. And yes that the charge that you talk about relates to that restructuring.

[David Loeb:]

So who is taking over the operating, is it the owner of those hotels?

[Paul Edgecliffe-Johnson:]

No there actually going to be three different portfolios with different managers.

[David Loeb:]

Okay. And this was basically an agreement or what you didn’t get cash in for giving those operators that management contracts?

[Paul Edgecliffe-Johnson:]

No.

[David Loeb:]

Okay.

[Paul Edgecliffe-Johnson:]

I mean that bring in much more in line with the rest of our UK business, which was predominantly franchise and that works really well in the UK.

[David Loeb:]

And similarly in the U.S.?

[Paul Edgecliffe-Johnson:]

Yeah absolutely, yeah.

[David Loeb:]

Okay great, thank you.

[Paul Edgecliffe-Johnson:]

Thanks.

[Operator:]

Thank you. Our next question comes through from the line of Brad [Indiscernible] from SunTrust. Please go ahead.

[Unidentified Analyst:]

Hi Brad on for Patrick Scholes, this morning. Our first question here, but we also wanted to ask on Kimpton. Anything you guys are planning in terms of increasing contract duration there? And thanks for taking my call.

[Richard Solomons:]

Nothing specifically we talk about right now, I mean I think we’re delighted with the acquisition, it’s progressing really well. We have met with the existing owners, spend time with existing owners, we’re seeing a lots of good things in the business. So we remain very bullish about it, clearly at the moment it’s running exactly how it ran before to the extent to which we’ll at the contracts that will happen overtime, but I think the stability of their business and the relationships to that they have with owners and what they deliver for consumers really talks to its strength nothing that worried about right now.

[Unidentified Analyst:]

Appreciate it.

[Operator:]

Thank you. We have no further questions in the queue. So I’ll now hand you back to your host for any concluding remarks for today’s call. Thank you.

[Richard Solomons:]

Thank you, Wendy. That’s fine everybody appreciate you’re listening there is other things going on. So we’ll leave you to that and thanks so much and please contact the IR team if you’ve got any questions later in the day. Thank you. Thanks, Wendy we’re done.

[Operator:]

Thank you. Ladies and gentlemen thank you for joining today’s call. You may now disconnect your lines.