Charles River Laboratories International Inc (CRL) 2003 Q2 法說會逐字稿

At this time, I would like to welcome everyone to the Invaresk Research Group second-quarter 2003 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks there will be a question-and-answer period. (CALLER INSTRUCTIONS) I would now like to turn the call over to Matt Downes (ph) for the introduction.

Good morning ladies and gentlemen. Welcome to the web cast of Inveresk Research Group's results for the second quarter of 2003. Present from the Company will be Dr. Walker Nemo, President and Chief Executive Officer; and Mr. Paul Cowen, Chief Financial Officer. The presentation will be presented simultaneously over the Internet, with access via the Company's web site at www.inveresk.com. An opportunity will be given for questions to be asked following the presentation.

We would remind you of the Safe Harbor disclaimer included with the Company's results presentation. Statements contained in his presentation that are forward-looking are based on current expectations that are subject to a number of uncertainties and risks and actual results may differ materially. Factors that may cause such a difference include but are not limited to risks associated with the reduction in research and development activities by pharmaceutical in biotechnology clients, changes in government regulations, the effects of interest rate and foreign exchange fluctuations, our ability to attract and retain employees, the loss or delay of contracts due to economic uncertainty or other factors, our ability to officially manage backlog, our (technical difficulty) business through strategic acquisitions, competition within the industry, and the potential adverse impact of health-care reform. Further information about these risks and uncertainties can be found in the information included in the Company's recent filings with the Securities and Exchange Commission, including the Company's registration statement form S-1 and form 10-K, filed on (technical difficulty) reconciling reported and pro forma financial data can be found in the Company's press released filed July 29, 2003.

Today's presentation will take place in two parts. Dr. Walker Nemo will provide an operational overview for the company and Mr. Paul Cowan will provide a financial overview. With that, I would like to introduce Dr. Walter Nimmo.

Good morning everyone. Welcome to this presentation of the financial results of the Inveresk Research Group for the second quarter 2003. We are pleased to say that we have exceeded consensus forecasts for the Company (technical difficulty) 2003. We recorded net service revenue $67 million in the second-quarter, a 21 percent increase over net service revenues for the same period in 2002. Year-and-year comparison has benefited from exchange rate movement, although underlying growth was reasonable given the strength of the second quarter results in 2002. Revenues increased 16.2 percent from the first quarter of 2003 as a result of the anticipated rebound of activity during the second quarter at CPBI (ph), or North American preclinical operations as well as continued strength in preclinical Europe and their clinical activities. Income from operations totaled $12.9 million compared with a $37.9 million loss in the second quarter of 2002. On a pro forma basis, income from operations in the second quarter of 2002 was $12.1 million.

Preclinical revenues were $42 million, compared with $56.4 million in the first quarter of 2003, demonstrating the rebound at CTBR and continued strength of the European preclinical business. Meanwhile clinical business. Meanwhile, clinical development revenues grew 29 percent year-on-your and operating margin increased 11.3 percent in the second quarter from 10.6 percent in the second quarter 2002. Reported earnings per share were 27 cents in the second quarter of 2003 compared with a loss per share of $1.87 in the corresponding period of 2002. On a pro forma basis, earnings per share for the second quarter of 2002 were 23 cents. On a pro forma basis, therefore, earnings per share increased by 17.4 percent compared to the second-quarter of 2002.

Cash flow from operations totaled $17 million year-to-date, before capital expenditures of $8.5 million. Continuing the positive momentum from the first quarter new business savings totaled $68.7 million in the second quarter of 2003. Year-to-date new business signings totaled $145.3 million and confirmed backlogs stood at $224 million at June 30, 2003. All of our business has met or exceeded their new business signings budget in the first half 2003. Additionally, strong operating results in year-on-year growth were recorded during the quarter by all of our operations.

Moving on to discuss in more detail the breakdown of our net service revenue -- you can see that during the second quarter in 2003, preclinical revenues accounted for 63 percent of net service revenue and clinical accounted for 37 percent. Picking up revenues by client type in the second-quarter -- pharmaceutical companies accounted for 54 percent of net service revenues, while technology companies accounted for 32 percent of net service revenues, and others -- predominantly agri-chemical, veterinary, and chemical companies accounted for the remaining 13 percent of our revenues. 58 percent of our revenues came from clients based in the United States, 32 percent from Europe, 7 present from Japan, and 3 percent from the rest of the world. You'll see from slide six that we have maintained our core strategy to have a highly diverse client base. In the second quarter, our biggest client accounted for 10.4 percent of net service revenues. Our five largest clients counted for 24 percent of net service revenues. And the top 20 clients accounted for only 44.3 percent of net service revenues. Also, we continue to emphasize that revenues earned from our biggest client are spread across multiple service offerings and also over multiple research programs.

As many of you already know, we assessed internally, the strength of our underlying businesses using a measure of a total of signed contract. This participant measures the accumulated new business signings in each of our individual businesses over the previous 12 months. We use this measure to assess potential revenues for the coming 12 months. (indiscernible) total of signed contract at June 30, 2003, amounted to $281 million. Benefiting from the continued strength in new business signings across all our businesses. Our internal aim for this participant is going to be 10 percent over our target revenue of the coming year, in which case we have historically made our revenue target.

Confirmed backlog at June 30, 2003, was $224 million compared with $202 million at June 30, 2002. Because of the short-term nature of last parts of our preclinical and Phase I businesses, we prepared to use (indiscernible) total of sign contract as a leading indicator of the underlying health of our businesses. (indiscernible) summarizes key points of our acquisition of PharmaResearch. PharmaResearch is a United States-based drug development services group focused on the provision of Phase II to Phase IV clinical trials in certain areas of respiratory and infections diseases. The Company is based in Morrisville and Wilmington, North Carolina, with foreign operations based in United Kingdom, France, Spain, and China. This acquisition allows us to increase significantly the scale and service of the North American clinical development operations. PharmaResearch's strong presence of respiratory and infectious diseases offers the opportunity to build further on Inveresk's high value-added clinical support services. In 2002, PharmaResearch recorded net revenue of $40.6 million and income from operations of $4.8 million.

The acquisition is forecast to be accretive to earnings per share for the remainder of 2003 for further a (indiscernible) objective for the clinical business segments. Transaction (indiscernible) PharmaResearch at $7.1 million, net of cash required approximately $10 million. And the acquisition's effective from 30th July 2003. PharmaResearch acquisition has been financed through a new $150 million syndicated bank credit facility arranged by Wachovia Bank. This new facility will also replace our existing bank credit facility who is in place at the time of our IPO. I would now like to turn the call over to Paul Cowan, our Chief Financial Officer for the financial overview of the second quarter.

Good morning ladies and gentlemen. This next slide reconciles our reported and pro forma results for the second quarter of 2003. Reported income for operations in the second quarter totaled $12.9 million, compared with a loss of $37.8 million in the second quarter in 2002. On a pro forma basis, however, income from operations was the same as reported in 2003 and $12.1 million in the second quarter of 2002. Compared with 2002 preclinical and clinical increased net services by 16 percent and 29 percent respectively. Overall, the Company recorded net service revenue in the quarter of $67 million an increase of 21 percent compared to 2002. We continue to benefit from positive exchange rate movements, particularly with regard to the Canadian Dollar and Pound Sterling. On a constant dollar basis, net service revenue in preclinical and clinical increased by 3 percent and 22 percent respectively in the second quarter of 2003. Growth in the preclinical business segment was satisfactory, given the results of the North (indiscernible) CTBR during the first quarter of 2002 and also given the very strong second-quarter result in 2002, which as reported benefited from a number of one-off items. Income from operations increased by seven present and 17 percent for the preclinical and clinical segments respectively. Overall, on a pro forma basis, income from operations increased by seven present compared to the corresponding period in 2002. Compared to first quarter of 2003, income from operations increased by more than 50 percent, reflecting the recovery of CTBR and the continued strength of the remaining businesses. We'll discuss later, the key factors influencing second-quarter revenues and operating income.

Preclinical recorded returned to strong operating profit margins during the quarter. As a percentage of revenue the operating margin for preclinical was 28.9 percent in Q2 compared to 31.2 present during same period in 2002 and 24.2 percent in the first quarter of this year. We're pleased with this outcome, given our first quarter results. The impact on margins of exchange rate movement and the fact that the 2002 operating margin benefiting from a number of one-off items previously reported. The continuing solid performance of our clinical business segment contributed strongly to our second-quarter operating performance. Clinical reported an operating margin of 11.3 percent in the quarter compared to 12.4 percent in 2002. This slight decline in margin reflects largely a shift in business mix with a higher proportion of revenues this quarter then accounted for by the recovery of our of pocket expenses. We were nevertheless pleased by the 17 percent year-on-year increase in the operating profit of this segment.

Inveresk reported diluted earnings per share of 27 cents during second-quarter 2003 compared to a loss of $1.87 cents in 2002. On a pro forma basis earnings per share in the second quarter of 2002 amounted 23 cents. In his next slide, we highlight the key factors which influence the Company's financial results in the second quarter 2003. These included a rebound in activity levels at CTBR where revenues increased 24.2 percent compared to the first quarter of 2003. Our strong European preclinical performance has been maintained. And we have seen acceleration in the growth of our clinical revenues. Although the mix, as I have mentioned has been impacted -- or has impacted operating margins slightly. We have clearly benefited from favorable exchange rate movements, positively impacting translation of non-U.S. financial results. Although translation exchange losses recorded in the quarter amounted to $.4 million. This is significantly down on the first quarter and demonstrates the benefit of the hedging program put in place in March. I should probably say at this point in time that on a (indiscernible) ignoring the hedging arrangement, it would have been a multiple of that -- of $.4 million. (indiscernible) security costs during the quarter amounted to $.1 million and we experienced, once again, a negative mark-to-market adjustment on our interest rate swaps of $.3 billion.

In terms of cash flow and balance sheet performance -- in the quarter of 2003 -- sorry, in the year-to-date to six months into 30 June 2003, the Company generated cash flow from operations of $17 million. We invested a further $8.5 million dollars in capital expenditure during that same period principally on the expansion of our preclinical facility in Fran, Scotland. The Company had net days sales outstanding of 31 at the end of June, compared with 30 days at December 31 2002. And at June 30, the Company had cash and equivalents at $21.8 million and gross financial debt at $57.5 million. As we mentioned earlier, the acquisition of PharmaResearch is being funded primarily through a new $150 million credit facility arranged by Wachovia Bank. This facility will also replace our existing bank credit facility. I'll now hand you back to Walter to make his finalized presentation.

Thank you. We experienced continued strength in new business signings, which were experienced across all operations -- toxicology, laboratory sciences, and clinical. Clinical expansion remains on plan, both on the Montreal and (indiscernible). The acquisition of PharmaResearch supports further clinical profit objective. And the acquisition will be accretive from the outset. European preclinical operations are experiencing continued strong demand. (indiscernible) of new business inquiries at CTBR and strong new business signings or the delayed decision-making by clients may impact revenue growth in the second half. Based on these factors, our 2003 guidance has maintained a pro forma EPS of $1.07, $1.09 for the full year on a diluted basis. (indiscernible) account of costs associated (indiscernible) of the PharmaResearch Corporation under the joint share offering in first-quarter. As we have stated in the past, we will continue to service our clients with quality, high-value-added services. Clinical expansion is on plan and acquisition of PharmaResearch (indiscernible) clinical profit objective. Inveresk is benefiting from its diverse revenue and client base as well as our diverse service offering. This positions the Company well for the future. Ladies and gentlemen, that is the end of our presentation. I would like to invite press into participance on this call. Thank you.

(CALLER INSTRUCTIONS) Your first question comes from Dave Whittle of Jeffreys & Company.

Good morning gentlemen. First question, could you breakout Montreal revenue from total preclinical?

Montreal revenue -- I'll come back to you on that in a minute.

The acquisition of PharmaResearch -- you mentioned in the press release -- a couple of therapeutic areas that seem like they would be reasonably complementary to some of your preclinical expertise. Clearly, the North American missing component is Phase I. You've talked about your thought process on building out Phase I capabilities in North America. Could you expand on broad strategy there, including the PharmaResearch acquisition?

Thanks, this is Walter. We agree that the PharmaResearch complements our preclinical activities very well, as well as our critical activities. And yes, we still consider actively looking for Phase I expansion and in United States. But we haven't made any decisions so far, excluding (indiscernible).

Does PharmaResearch come with a pretty healthy backlog?

PharmaResearch comes with an excellent backlog, yes. In quality and quantity.

On the existing clinical business -- the description of the shift in business mix and recovery of out of pockets. Am I interpreting that correctly, that you have some at-risk out-of-pocket expenses that are therefore included in revenue and included in cost, that are squeezing the margin in the quarter? And if so, how long with those contracts hit -- be hitting the P&L?

These are purely out-of-pocket expenses, rather than pass-through expenses. It's margin due to project timing. And we wouldn't expect this to be a long-term point. And clearly, with the acquisition of PharmaResearch, we'll have a much broader revenue base across which to absorb it.

A lot of talk about improving environment from what was really a very slow outsourcing period in the first couple of months of this year, picking up -- starting at about March and on through the middle of the year. In your numbers -- in your new business numbers which were solid but look to be sequentially down from 1Q, as well as some of the other numbers reported by other CROs, that second-quarter pickup doesn't seem to have materialized. Is there something that I'm missing there?

I think what you need to do, Dave, is look at the year-on-year comparison. I think, if I can remember correctly, signings in the second quarter of last year were around 55 million. And that was sequentially down from the first quarter. We have do have a seasonal peak on new business signings in the first quarter, particularly in the preclinical business.

Alright, I'll jump off. Thanks.

Just in response to your first question, the revenue for Canada in the second quarter was $25.3 million.

25.3 million? And if I could just ask one more on that. Your expectations -- your guidance for the full year, and therefore, the remainder of year -- you are obviously hedging a little bit on Montreal. Should we expect revenue to be sequentially lower over the next two quarters than that number?

Again, Canada has recorded a very strong quarter. We're seeing sort of record levels of inquiries and very strong new business signings. Maybe the timing of some of those are such that, I would expect the third quarter won't be quite as strong as the second quarter.

John Kreger, William Rantz. (ph)

Could you just expand a bit more on the strong growth you saw in preclinical sequentially? The 6 million or so that you saw, in terms of an increase -- was that coming from Canada or Scotland? And within the preclinical service business or in the lab business?

It was clearly given, the mix (indiscernible) the strong rebound in the North American operations. It was largely attributable to the rebound in Canada, at CTBR. Nevertheless, we saw a continued strength in European preclinical business. And it is in the (indiscernible) business. But also we're very, very pleased with the growth that we're achieving in our lab science business as well. Were you asking where the origins of the client were?

No. I was really asking -- I think Paul got it. What was really driving the increase? Was it Scotland or Canada?

It was likely Canada, where it's had a very, very solid quarter.

Could you just give us a bit of perspective on -- seems like we've had a bit of a divergence between the performance in Montreal and the performance in Scotland, in terms of your preclinical business. As you try to look at how those two units differ, in terms of services or client base, what might be explaining the divergence?

The European business has more business from Europe. Whereas (indiscernible) historically had more business from United States. And the volatility early in the year was almost exclusively a United States problem. So, European is less affected that way. Also, our European base over the last few years has the moved towards lab sciences and less general toxicology -- more towards the long-term studies (indiscernible) donated a status (indiscernible) (inaudible ) toxicology, less lab sciences. We're addressing both of these problems (indiscernible). We're addressing most of these differences now.

Great, thanks. And if you have a strategy in-place at this point, can you talk a bit more about what the game plan is, in terms of integrating PharmaResearch with your own clinical business? Do you have a sense about who will be running the combined unit? And will you fold PharmaResearch into your RTP facility?

The PharmaResearch business is very complimentary to our on own -- high-quality, high value-added people. We will report to you as (indiscernible) is ahead of clinical. And we do expect to move the facility in Morrisville, North Carolina to our (indiscernible) facility. (indiscernible) (multiple speakers)

Could you run through the shift in foreign currency impact on revenue growth again. I didn't quite get that. If you take your one percent year-over-year increase -- if you used a constant dollar exchange rate, what would that percentage of increase have been?

Constant dollar effect on the preclinical business -- using constant dollar revenue as revenue year-on-year by three percent. And then the clinical business revenues grew by 22 percent on a constant dollar basis.

Steve Unger of Bear Stearns. (ph)

Just a follow-up on that last question from John Kreger. That was -- appears to be a significant impact from currency in quarter. Is that primarily related -- I know the euro was strong. But was that primarily related to the Canadian dollar and then, if I strip away the impact of currency sequentially, how does that increase the rebound in Canada -- look like?

It is primarily due to Canada although Pound Sterling also had a major impact. Canadian Dollar for most of last year was roughly trading at about 64 cents U.S. During the quarter it went up to about 74 cents -- averaged around 74 cents. It has come back a little. But then it has been continued to (indiscernible). Looking sequentially, I would say there's not been quite as much of a move. I looked at the first quarter. I think the average exchange rate was around the sort of 70 to 72 cent mark. Whereas, in the second quarter, the average exchange rate was around 74 cents. It's clearly going to have much less of an impact sequentially in that respect.

So then the -- I guess it's around a $5 million swing then in the quarter at Canada. And you're saying that most of that is purely just the rebound in business?

You recall that when we presented our first quarter results, we'd indicated that the impact of January and February in Canada was roughly 10 percent of total preclinical revenues. So, what you're seeing here is pretty well full recovery and bit more of that.

In the press release, you talked about slow decision-making may be expected in the second half of 2003 in Montreal. Could you expand on that?

Well, we're seeing very strong new business signings and record levels of inquiries. But when we look at those inquiries, they're not sort of moving to being sort of signed commitments, as quickly as we would expect. And the net effect of all that is that it clearly, as we move through the third quarter -- filling the third quarter out, it's still subject to some time -- sort of -- making the final decisions and sort of pressing (indiscernible). We see it more as a possible impact in Q3. We're very prudent in these things. Possible impact in Q3 and recovery in Q4 -- or back to more normalized levels in Q4.

So, your forecast is baking in some conservatism? With the potential for this?

Yes. When you see the inquiry levels, they are significantly higher than they were at the beginning of the year.

Are you releasing any financial targets for the PharmaResearch acquisition? Revenues -- ?

There will clearly be some revenue growth off the 2002 numbers coming through. We are sort of in an integration planning process at this point in time. And what I would like to do is indicate the sort of revenue and proper targets for the Q3 numbers. Clearly, we're -- one of the complementary items is that the Morrisville facility quite close to our (indiscernible) facility. As you know, we've got a fair bit of surplus (indiscernible). And the PharmaResearch facility was on a lease which terminates this year. For instance, one of the clear benefits there will be in the costs on that front.

In terms of revenues, you'll at least do the 40 million that PharmaResearch did in 2002?

Yes.

Just a last question. Coveyance (ph) on their conference call, mentioned an interesting deal with one of their customers -- it looked like a significant customer for them -- that they made an arrangement for non-ex -- exclusive services on the toxicology side for long-term tox. Is that something that you think is a one-off in the industry? Or are you seeing a pickup in these types of negotiations or interest from customers in those types of arrangements?

As you know, when we expanded at CTBR, we had a similar type of relationship -- not exclusive, because we do not like totally exclusive things. We would like to be able to work with everyone and their clients. We'll do that also. But the pre-selling of our expansion in January. I don't see it as a huge thing happening to the industry -- these one or two clients just like that arrangement.

As a reminder if you like to ask a question (CALLER INSTRUCTIONS). Kemp Oliver, SG Cowan Securities.

Just a question regarding PharmaResearch in the financing and other assumptions. Will PharmaResearch have any impact on your overall tax rate, given the geographic mix? And secondly, what's the rate on the new bank line?

In terms of the tax rate, clearly as we increase the amount of earnings in the U.S, we will see a slight increase in the effective tax rate. But I don't expect that to have much of an impact this year. As regards to the cost of the new bank facilities, they are priced at liable plus margin between 1.35 percent and 2 percent. And the initial pricing is at 1.75 percent over liable.

Great. One thing to clarify, relative to the preclinical business in second-quarter versus first-quarter is, in first-quarter, what was the constant currency growth rate in preclinical?

Constant currency in the first quarter -- I don't have that close at hand I'm afraid. I think it was a decline of about 3 to 5 percent. I'll come back to you on that.

Fine. Thank you.

Follow-up question from Dave Windley, Jeffreys & Company.

Thanks. A couple of my questions just got asked. The North American or -- yeah, North American toxicology environment. Clearly, you had nice recovery in second-quarter. Inquiries are high. It sounds like the -- call it choppiness or whatever -- in new business signings and moving them into animal rooms (ph) is a decision process phenomenon? Or is there a pricing and win-rate phenomenon going on in there?

We would say it's a decision rate phenomena, based on the very, very strong levels of inquiries and outstandings (indiscernible) effectively.

Second question. Sticking with preclinical -- I asked a question earlier about adding on Phase I -- sounds like that's not a near-term event. What about relative mix of lab -- I think I'm correct that Montreal has a much smaller lab revenue component than Tranit (ph). How soon might you be expanding -- Walter, you kind of touched on this earlier -- but expanding the lab services component of Montreal and then vice-versa in Europe. How much more growth room does Europe have? Or is it somewhat capped in its ability to grow revenue sequentially by capacity?

It's (indiscernible) in there, David, (indiscernible) laboratory sciences, as you will. In Edinburough, we have a building half-built -- a $7 million building, which will be completed next year for clinical laboratory sciences -- laboratory sciences reporting on clinical activities. Very significant expansion. So, we continue to expand (indiscernible). In Montreal, as we have indicated to you in the past, we're moving more toward lab sciences. And we will be were talking about a significant expansion, which I think we've shared with you in the past (indiscernible) of this year -- our completion probably in 2004 or 2005, which will include significant laboratory sciences expansion. Also Dave, a lot of -- there was a facility freed up in Montreal with the last expansion to allow us to build the lab sciences business. And indeed the lab sciences business in Montreal is growing very handsomely at the moment.

Ok, thanks.

(CALLER INSTRUCTIONS). John Fuder (ph), Fescahana (ph)

Good morning, Walter. Just a quick question regarding the integration of the acquisition here. I jumped on a little bit late. So, apologies if you answered this. But is there an expectation for material headcount reduction? Or could you talk a little bit about the overlap, if there is any, with the services and your employee base?

Nice to hear from you. The PharmaResearch adding on to investors very complementary. And (indiscernible) very focused on (indiscernible) has declined (indiscernible) particular. That is all upside. As we indicated a few minutes ago, the most significant change I think you're likely to see is the moving of the office in Morrisville to the (indiscernible) facility, as we (indiscernible) at the end of the year. Because PharmaResearch is in Morrisville and is very close to our (indiscernible) facility, where we have excess space. That's the significant plan of the integration. And we don't have any other concrete plans for (indiscernible) integration (indiscernible) of downsizing, whatever. (indiscernible) of the growth because (indiscernible) serviced is the PharmaResearch offer. (indiscernible) We'll provide a bit more color to that with the third-quarter numbers.

My understanding -- PharmaResearch had a high-quality reputation in the industry and a pretty focused offering. Could you comment. Was it a highly competitive bidding process? Or just a little bit of -- Paul, if you can -- a little bit of color around that?

I agree that PharmaResearch had a very high reputation to client diligence. From our perspective, it was always very attractive to us, because of their services and their geography. We've been in discussions for a long time with PharmaResearch. And, so far as we are aware anyway, I don't think it was competitive. I think, again, the management and the groups saw considerable benefits from combining. And there is a long discussion.

Very well. Congratulations.

Steve Unger, Bear Stearns. (ph)

Just a follow-up quick -- Walter, you made a reference to a profitability target for the clinical operation. Could you just reiterate what that is?

Inveresk was a small clinical operation. It's profitability was close to 20 percent. We said the target aim was to get closer to that step-by-step after the free trials (ph) acquisition. At the same time, Stephen, we've got probably 20 percent is not achievable for clinical (indiscernible) because of a geographic spread that we've got between 15 and 20 -- in the mid to high-teens, in all the pretrials (indiscernible) and the contracts and (indiscernible).

So, you're saying that this acquisition will allow you to get to 20 percent?

I think what we're saying, Steve, as we said in the presentation is, this acquisition further supports our profit objectives in the chemical business.

What is the profit objective?

15 to 20 percent in clinical -- 15 to 20 percent operate margin in clinical.

Thiatcahana (ph) August Partners.

I'm just wondering on the preclinical business -- one of your competitors is saying that demand is extremely strong in the market of North America. I'm just wondering why you're being so cautious going into the third-quarter?

We would agree that there seems to be very strong demand, based on the inquiry levels and the signings. I guess it's just more a case of timing than anything else -- and when the business actually arrives on our doorstep and filters in.

Are you seeing any difference in demand from biotech versus pharma customers? Both segments?

Yes.

At this time, there are no further questions. Mr. Nimmo are there any closing remarks?

Thank you. Ladies and gentlemen, thank you very much for joining the call. Thank you for the questions and interest in Inveresk Research group. I look forward to you (indiscernible) particular on the next conference call. Good bye.

This concludes the Inveresk conference call. (CONFERENCE CALL CONCLUDED)