Northcoders Group (LSE:CODE) — Full year results for the year ended 31 December 2025

0:00 Good afternoon, and welcome to the NORTHCODERS GROUP PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time via the q and a tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Chris Hill, CEO. Good afternoon, sir. Thank you very much, and thank you everyone for joining us today. And I wanna be very clear and transparent that full year '25 was a challenging year, not just for for for NORTHCODERS, but the wider skills and recruitment sector, especially the technology focused ones amongst the some of the changes to the industry that that we've been seeing. But for us directly, the shift in the UK government funding for skills from a national model to a regional one did fundamentally change the landscape, significantly reduced volumes, decision making from those authorities was very delayed, it did really create a lot of uncertainty, across the market.

1:13 And, you know, we're we're not gonna hide, but I will start to talk about what I am proud of. And what I think really defines us, for last year is how we, responded to our disruption and uncertainty. We took very early decisive action. We made a business, substantially reducing our cost base and protecting the gross margins despite incredible significant downward trend in revenue. And one main thing that we focused on is preserving cash, which was the right decision rather than waiting for a different outcome in a market that we realized have structurally changed. They were not easy decisions, and they very much affected our team and required a lot of hard work across the business.

2:01 But they were the right decisions. I do wanna take a moment just to say how proud I am of the, North Coast group team and the way they handled the past year with professionalism, resilience, and still with that focus on maintaining great quality for both our learners and our clients. They've all been truly exceptional. The last year wasn't just about defense. We continue to build what we believe is the future of the business. So what you see today is a company that's gone through a deliberate transition. And, yes, revenue is down year on year, but we protected gross margin. We maintained a strong cash balance, significantly reduced our cost base, and we built real momentum within our new b to b offering counter. And that matches because it gives us plenty of options for the future.

2:50 And as we go into this year, we are certainly not standing still, but I'll take you through the rest of the investment deck in the results deck in more detail, and we'll talk about those points further. So this is probably the last time I will use this business model side. However, it is relevant to the last full year, how the business was set up when we went into the year. And it's our NORTHCODERS group is made up of three core brands. I'll go through this relatively quickly, so I know many people have seen this before. NORTHCODERS has always been our training engine, training group counts, technology focused, and tech returners who does a similar thing, but for people returning to tech, and now COUNTA. And the way that we operate our model is that we have various training frameworks of people from all walks of life come and join us on journey to become a professional technologist.

3:43 And using the recruitment through tech returns and NORTHCODERS, COUNTA embeds teams to organizations, for the long term, culturally built in. We're working with some substantial clients across mainly financial services, critical infrastructure, and, the public sector also. So I'll start with the headline numbers. And as mentioned, it's a deliberate transition year for the business. As expected, revenue is down following the structural funding changes, but we protected cash, and we reset the cost base as early as we possibly could in the year, which has put us in a much stronger position, going into, 2026. Revenues fall into 4,900,000, due to loss in government funding.

4:31 However, we took the team has enabled us to keep the gross margin strong. Most of our team were were full time employed tutors. And although the 59% gross margin looks negative versus the 67%, that's also due to a change in sales split and the slight lack of the restructuring take take taking effect when compared with the the prior year. So our EBITDA is a negative 600,000, which does, again, highlight the amount of restructuring cost base that has changed. The revenue was pretty much half from from from the year before. So we did a lot to combat, a 3,900,000 drop in revenue from 2024. The cash balance remains strong and has improved year on year.

5:16 And and we took in terms of counter, the revenue last year was up to 1,500,000 and 800,000. And within the year, in terms of sales orders, where we took pre bookings, counter contracts are twelve months in length, and we took a record 2,500,000, in the year account sales orders, and, I'll talk more later, about, training in the current year. So, again, yeah, not shying away from that. I went over this in the the the introduction, but in a bit more detail in terms of what was structural changes to The UK skills funding. It was very much a national volume like contract that we believe would be in place for six years. That was how long that contract was, but the change in governments decided that the allocation of skills funding was gonna go to regional combined authorities, which took a lot of time to reach procurement and the awards phase. A lot of the authorities didn't really know how to do any of this stuff. We have had good success here in London with Greater London Authority, which is a a rewarding relationship that's continuing to power us through through through this year. But whilst funding landscape has changed, by no means has the demand for digital skills gone away.

6:34 Yes. There are changes to to to what employees and companies are are wanting. It's shifting towards experience, AI capability, embedded delivery. So, yeah, in more detail on our response for the year, our our action when we we knew that the national contract would no longer exist, and we didn't visit these at the regional authority. We've done work across apprenticeships and other regional authority type funding in in the past few years of the business. So so we did expect that. So we materially reduced the cost base, and that was, you know, across the board, not just around boot camps, but we you know, any sort of discretionary spending, we we literally made cut after cut after cut to make sure that we just reduce the cost as much as we as we possibly could to to preserve the cash in a year that we knew would be that would not hit the revenues of cash generation of the the year before. We've got some slide later on the on the revenue splits and how they've changed, but where, you know, private and commercial from the training was an area that we focused on, as well, of course, of of COUNTA, where we're seeing positive, traction, last year and going into this year also.

7:52 So, yeah, I'll talk about the kind of repositioning of the business. It's more led by by by by counter, and feel like it's a much more balanced business model. We now like, for example, when we work on training boot camps with with with Greater London that is giving us an opportunity to to to expand those people into COUNTA, and we are specifically tailoring the training that we do to the needs of our clients and training the people through both Checkatrade and NORTHCODERS that are required to fulfill the demand of of counter teams, which is, you know, enterprise led and and has a a significant opportunity. We we can't be a good market within a large department of public sector and other peers on the market recently reported significant demand at public sector technology service, but our very strategy with the counter fully aligns with the government strategy, which is to reduce the contractor headcount within the civil service for for the digital and convert that over to full time employees to ultimately save the taxpayer money. And, you know, we're we're we're going about counter incredibly professionally, and we are now listed on multiple frameworks, including getting our, big ISO accreditation has been a been a huge achievement. So when procuring work through special financial services and and public sector, those are certainly invaluable.

9:21 You know, our our excellence was recognized despite the disruption of of restructuring and and all the details going on, and we were rated outstanding by for training services, which, of course, gives us, you know, credibility not only within skills boot camps funding, but within, wherever, things like skills England, the new initiative, go towards with these kind of, like, modularized, training platforms that are coming in. K. I'm gonna talk more about counter. And, yeah, we believe I I firmly believe that we've made strong progress in 2025, but the momentum has continued into this year. You know, we're delivering increasing levels of embedded teams across both enterprise and full executive clients.

10:11 You know, our accreditation, which I mentioned on the last slide, are gonna really open up more markets as well as the the the frameworks that we can both work with large consultancy businesses to kind of parachute our modeling. But also now we can work directly with the public sector services themselves, and the government's initiative is to save 5,000,000 a year, which is the reducing contractors figure. And literally, counter does what it says on the tin. We put people in to deliver immediate value, which is what the public sector needs, hence the vast amounts of, like, procurement and digital services, which are which are procured by by central government. But when the time is right and has been very successful within within the public sector.

10:58 They have hired every single person that they've taken to counter, and then we are receiving purchase orders now for for for longer extensions, more teams, and, you know, that area is is substantially substantially growing. In terms of evolving the the the training division, you know, the growth in private and AI led training, you know, we're looking to create the next kind of generation of AI native software engineering, data engineering talent. That's what employers are asking us for. You know, they're really asking for, people to be able to use the tooling, that I'm sure we've all heard lots about to sort of, you know, significant disruption to to the way that everything's being done through through the focus on, AI. And, you know, we've got a small agile team now, so we're really able to make those changes. We bespoke about it.

11:47 And I think it's really important at this point to say we talked quite a lot about, the growth of counts and not being strategic focus, but, you know, training individuals from all walks of life and giving them life saving opportunities still remains close to what we do and always will do. But, of course, we wanna move that reliance away from from that large kind of funding that that that we saw last year. Focus on higher quality and just getting better outcomes, sort of less people, higher quality, and focus on those people going into counter teams rather than the open recruitment market. So, also, the board is well aware that that that the the aim listing is a a powerful way to investigate mergers and acquisitions strategic options, and we will directly seek opportunities.

12:41 Anything who's adjacent that may accelerate the scale of counter or bring us into adjacent markets, you know, complementary capability, earnings enhancing. We're looking to do whatever we can and certainly not, not considering, these options. We're heavily considering, that to just bring, good shareholder value. So I want to make sure that everyone knew that we were, there were certain options that we were, that we were seeking. K? So you'll notice I'm on my own this year. So I'm not quite as financial as as in the past, but got a good idea about where we sit. So I'm gonna go through. Obviously, we've covered this in terms of the revenue drop in 2025 and and the EBITDA loss of 600,000.

13:31 Obviously, the bottom line loss for the company is around 3,000,000, which I'll talk talk about soon, but it's not it's mostly not cash based. Losses is to do with the, you know, the restructuring of the business and and the assets that are no longer required to to run the training at such volume. Kind of for me, at least more interestingly, is, you know, the change in the the the the revenue split. Just 60% of last year's revenue was government funding and expanding not only the percentage, but the amount of revenue that's coming from direct to consumer or or corporate training as well. And with 30% of last year's revenue being counted, and that's the the growth of the the trend of counters revenue being most significant portion of of the wider group revenue. We are seeing that commence this year, and and we certainly do see it taking over.

14:35 Okay. So in terms of the income statement, we talked before about the gross profit margin. We do make a lower gross profit margin within counter also than we do within trains. So as the counter revenue becomes more significant than the than the training revenue, our margin will come down. And we've got long high visibility contracts that that last for last for twelve months. And, obviously, in terms of gross margin last year, there was a slight lag between restructuring taking effect and that actually hit hit hitting the the p and l. So in terms of the what else is in the bottom line, minus 3,000,000 of profit after tax is we is significant, write downs from the balance sheet to do with the the trading assets that have been, procured and developed over the years because they just simply will no longer be required because they were there to run at large scale contracts, you know, to train, you know, hundred, hundred and fifty people a month. It just wasn't right. So I want a much leaner business model, not only on cash costs, but just on p and l costs going into, 2026.

15:44 So we took a decision to to no longer use, some of those assets. And then, of course, there is, restructuring. Restructuring, comes at a one off kind of nonoperational cost, and, you know, we did the best we could buy. And everybody who was was leaving the company in terms of fairness and in terms of the well, the cost of them that we have to go on and find new opportunities. So these slides say in terms of more detail on the cash flow position and the financial position of balance sheet. I'm not gonna go through those in detail, but they are, of course, included in the this which will be shared with everybody.

16:30 I'd to talk about the outlook next. So positive start to the year. We've got contracted revenue in place, and we've got a strong pipeline for council. So my apologies. So we've got 1,500,000 of revenue already contracted for council. We've got a million of list here at the final stage of closing. We are waiting on purchase orders and getting those things started. So that takes up to, you know, around sort of 2,500,000 off of which is fairly early in the year, one third of the way through it. And we've got around about sort of six and a thousand of boot camps, and we think that will be about a million. In terms of the expectation for h two, the courses that we're running now are now broken down into the more modular pieces. We're seeing employer led demand for software engineers, data engineers to be trained in AI tooling, of, like, reinvent themselves. So that's a significant opportunity area, which is already already started. So, you know, high level, we estimate the breakeven point to be around 5,000,000 for the year to cover the current cost base. And we're assuming, you know, a counter when it comes to gross profit. We're assuming a counter led mix on that with good visibility of around 3,000,000.

17:50 And and with you know, we do have high confidence in closing the remaining gap from a a number of areas to continue to get to the scene. Within counter, the repeat business, contracts are always often, extended on them as a, an active pipeline of around about £4,000,000 worth of deals. And and when I talk about an active pipeline, I mean, that, you know, we are, actively, engaged on discussion points, discovery stage, you know, working with the organization, looking to looking to close those deals, not just that we've kind of spoke to once type of pipeline. Outside of that, there is also we have got we we have we have started to write this to the kind of g cloud framework, the other frameworks that, we're on for central government, which are which are larger.

18:40 I think it will take, some time to start seeing those things and probably a bit like the kind of regional authorities with the boot camp funding. Generally, it takes quite a bit of time, but we we are now in a strong position again with, like, public sector cases, which are imperative to be winning to to be winning. So, yeah, we're confident about full year '26, and we, you know, certainly we can cover that breakeven point. You know, we believe in the strategy, and we are seeing traction. And we're working hard to convert sustainable growth fund, bring long time, long term shareholder value. So, yeah, just to finish up, Was a bold transition year, '25.

19:30 Took early action to to get ahead. Super proud of the team and retaining the quality of what we do, the excellence. You can see that through the repeat orders through COUNTA and the the great opportunities that people have been going into who have gone through the the the training boot camps that we that we ran last year. And, you know, we're we're ventured 2026 as a leaner, much more focused business in a a better position, and we're seeing we're seeing real traction from that. I'm just gonna break down the global line cost as well just so everyone knows. So we've got researching cost of a 150,001 Costs and redundancy costs at 1,500,000 of impairment, and there was also a 50,000 leasehold impairment write off for the liquidations for that's the last of our leasehold buildings. We're now in super agile. Again, back to the research, the cost base, not just looking at people.

20:28 We're looking at everything we do. We're using those leaner in London and in Manchester, flexible spaces that are much better for our needs and having these kind of large lease premises there, a thing of the past. The p and l amortization depreciation last year was 500,000. Obviously, we'll be nowhere near that high. For this year, I'll send that share based payments and then around sort of net interest cost, interest paid versus received at around a 100,000 and then 8,000 of tax expense also. So at the beginning of the year, we restructured our debts moving over to to to a loan we now have with NatWest, which is not subject to EBITDA, debt serviceable, cash flow covenants.

21:16 It's secured against the intellectual property, which despite the balance that the the balance sheet change, that's more just about the, you know, the intangible accounting standard, the use of those assets. And those assets still exist, and they were revalued at the beginning of this year to a service a satisfaction level for and that relationship now is is going well. We'll cover further opportunities in the future. Okay. I'm gonna go and open up the questions. Sorry. Don't know. Okay. When when will the ops course upskilling course my apologies. Given doing some tests on my own. I've been able to kind of go through these. Yeah. So when will the upskilling courses online and how much revenue are they expecting to to generate?

22:08 I was probably asking about the the kind of like the modular based skilling courses that that that they're already live and available, and we are seeing specific interests around AI engineering from employers, you know, especially around upskilling teams of software developers and data engineers to becoming like that. Kinda like AI native has become the the term being used for people who are using, AI tool to to to write software and build software, from day one. In terms of the the the the courses, you know, our primary focus will remain on scaling counter, but but but those courses also form part of counters like broader framework for delivery value and and winning in the marketplace, you know, support the capability and and the delivery.

22:58 So it's in terms of how much it's best to generate, it's still very early from a from a revenue spectrum in my versus the counter contact, for example. They're not yeah. They they are much smaller in terms of the the the price and the revenue from those. But yeah. So we'd probably not able to, like, guide on a a specific number, but, you know, doing this engagement is encouraging. And then later on, I can make sure that that is something that we that we focus on to tell shareholders and investors about as we begin to they they they become, less so early stage. What are the biggest challenges you see to the counter consulting model, competing against smaller consultancies and securing significant business for NORTHCODERS.

23:46 So yeah. It's a competitive market. That that's for sure. But we do firmly believe that versus some of the kind of unlike higher time employ mechanisms that we're we have some serious value engaged with the client from day one. We kind of wouldn't recruitment drives alongside our clients. So people like to sync a culture aligned from day one. And we've got that real, like, that real kick out and that focus of the individuals moving over to to work for clients as opposed to work for us and, like, in some consultancies where you have, like, kinda, like, transient advisers that, you know, they're kind of there to upsell. More services from the consultancy as they are to to to deliver value with with you know, we're we're not focused on that. We have been told that, you know, it is a refreshing approach. I do believe that it's a new approach to combine and just talk to others upskilling modules in in in the question if you know, combining upskilling those people during that time so so there's some valuable to the organization.

24:47 So the strength, you know, competitive strengths, you know, with you know, the presence on the frameworks and those ISO certifications were were not easy to obviously, it helps quite a lot being a listed business with all of the kind of compliance and things like that that we that we have in place. So that gives us a, you know, serious strategic advantage. So, yeah, of course, competition exists, and then there's a lot of competition. But, yeah, we do but we, you know, believe we've got a strong platform to scale encounter. What is the latest cash position? What is latest cash position? So at the end of the year, cash was 1,600,000.

25:32 So the, obviously, the the the costs have been significantly, reduced going into this year. Now one thing about, like and we're seeing growth in in revenue and the immediately cash generative. So in in terms of, like, the the the cash flows and, you know, cash is a month on month and, like, some of the training that we've done in the past, we still do a very small amount of it where we kinda, like, relying on our balance sheet, swallowing student loans, and they'd be paid back through these, like, increased income agreements. You know, we're not doing so exact most. All of our revenue is is cash generative, so we're confident in in in in the cash flows.

26:17 And, obviously, you know, to mention those kinds of student loans that we've had done quite a significant amount in the past, we also do have we do have cash going in. Now just, you know, with the revenue being recognized months and years ago, so that also also strengthens the cash as well. Are there plans to find a new CFO? The plan was to review that post these results. We we knew that we knew that we getting someone in to help with these results. However, we have a financial controller who's a qualified accountant who have been working very closely to to put these results together. He's done an excellent job with doing this. So though, we will be reviewing that now that we knew that trying to get someone to do this year. And and Charlotte has been here for quite a bit of that month, so we wish Charlotte all the best. I know she's got other things going on, so I'm sure she's watching.

27:13 But all the best for for the future. But, yeah, there's there's I'll I'll say from outlets that there's definitely plans to review that. So with established players in the counter market, as FDM and Sparta suffering revenue decline and strong headwinds, what makes NORTHCODERS offering, different and successful? Thanks for that question. I I believe I've covered that. The the the offering the offering is different, and the way that we embed and the way that we do work with, the way we work with clients is different. There's been multiple problems, both of those brands mentioned there directly. The higher trade deploy market, it's always been kind of like a, you know, a graph to get the best university students, give them these kind of training agreements that if, you you know, and they kind of, like, suppress their income, over over years. There's a bit of saying that we we believe people are deployed into war zones, not careers that they love, and, that really kinda, like, consume the counter and, you know, people are actively applying. They have other opportunities, to go to these roles, and we don't have this kind of, like, what's super high risk within, revenue decline within the high training deploy market, which somehow unwindly a lot wider recruitment market.

28:22 Also, I'm, like, you know, well aware of is this kind of bench of people you've got sat there. You've kind of yeah. You've recruited x amount of graduates, and they're on your payroll. Teams are assigned immediately to client when they come in through the counter. We have a small amount of tech leads because the difference that model also is that it's a small incubator of individuals from tech returners and Northcodes or or the wider market depending on, you know, what we do look further field also depending on the contract. And then well looked after by that tech lead who who who is the one who returns to to North Coast at the end. So it's very different model. Much more time, much more lean, and, you know, we're not getting great feedback on it and kind of look forward to updating everyone on on on how that works.

29:10 The share price is at an all time low. What do you see as fair value? I don't think I'm able to I don't think I'm able to answer that question, but I suppose, yes. Of course. Very, very low share price, but that's pretty understandable. I think it's it's also a large loss making year, but, you know, we not only look at organically growing our business, but we also look at using the fact that we're listed as, you know, a superpower to to bring back shareholder value, and it's always our focus is to to increase that. Is AI risk to group's businesses, and are there any AI opportunities? Yeah. I would say say both. I believe that it is an certainly do believe that it is an opportunity. That's what we're seeing from, employees. I know that the again, why we report to the kind of graduate recruitment market is is struggling, struggling significantly.

30:06 So that's probably where that that question 's coming from because I think companies are holding off from, like, large recruitment. So I try to figure out, you know, how kind of how AI native, they becoming. But, there but there has also been reports of, you know, software development being a a a time requirement type, but what I believe is you're blend those two things together. People have to become more efficient and more, you know, understanding that how we use the AI tool. But there is, of course, risks in that. You know, cybersecurity risk is certainly pretty insignificant. And, again, you know, a potential large area where, automated software engineering will be much more vulnerable. We've seen multiple stories around, you know, organizations falling foul of that. So I do think it's something that we have to do. We have to to do properly, yeah, empowering people with kind of AI nature engineering skills alongside the kind of problem solving brain is certainly the way forward for us.

31:02 In case you do see some of the of the government funding business coming back by a local government. So we do have a government funding from we're currently doing Greater London Authority, and that's going very, very well. We had around around 2,000 people applied for a cohort. So we've super great engaged people. And for the beginning, we've been doing that stuff. So we're not building rebuilding community, doing that in person out of near Top Of Court Road. And that has we've seen we're seeing super strong results of people coming out, and then we had already one repeat cohort from London. And we, you know, we're super confident in the KPIs, and we know that the budgets have been allocated. So, yeah, I think in in h '2, there will be that there will be some of that. We talked about that. Trying to get that boot camp figure to to to a million pounds, and then, hey. I certainly believe that that that that we could do that.

31:58 What's the best estimate for the current year's p and l after we test it? Okay. So we don't have yeah. Where we don't have formal numbers in the market. I know that we searched them from went out from the Zeus analyst this morning saying that, you know, once we once we see the visibility and we feel like we're in a better position too, that we we certainly believe that I I went over the the the the the breakeven point of the company. When I talk about breakeven, at that point, that was certainly, you know, bottom line bottom line breakeven and kind of, you know, sort of a breakeven cash flow position also. And, obviously, that was there's a question just literally coming as always also about the will you be able to service the NatWest loan from the operating customer?

32:43 Yeah. The operating customer takes into account the the servicing, which is paid down monthly of Nat of the NatWest loan. It looks too high for the given stage of business following the reset. Is that the biggest business risk? Well, as that you know, as we we we we're seeing the revenues growing and the revenue is cash generative, so that that's that's well managed, the kind of cash position. So I think that answered both those questions. And I'll take this, last one, which is, can you update us on the current management structure? So we have, myself and, sort of, I'm founded the company in world. It's a very early stage, investor business and currently leads and heads up. At counter and is, you know, super focused on that as opposed to to doing anything with the the city and in the investment market. And two non executive directors, one chair.

33:36 And again, in terms of, CFO, we have a very well seasoned ex CFO on on Nick Parker. Sitting on our board. So there's been some some some great support there. Then within the company, we have, we have a kind of technology leader. We have a training leader. We have a, someone who leads the does all of the administration and the the kind of the, you know, leads on public sector training and, you know, because there's lots of, like, box ticking requires to do for that. Human resources, we have our human resources. Professional, then yeah. So at the moment, below that, currently recruiting for a for a new head of marketing, you know, to to to bring the new and current products to market. Counters made up of tech leads and kind of form the management team that do work within the the training boot camps, especially when it comes to, like, the project side of those.

34:29 And and then, yeah, we have we have two or three teams that deliver either journey, like, customer journey for training, in terms of careers, in terms of onboarding required by people recruit recruited to to to start our courses, and then some people who directly teach as well. So it's small team materials like the non cost of sales staff, which obviously counts with cost of sale is individuals. We've we've now around around 30 people. It's so it's quite a lot. You know, it it is quite tough, but it's probably about right for the for the size of this present. But and as we look to yeah. We'll certainly be looking at being much more kind of headcount efficient through some of the ways and means that that that are becoming popular as we grow the revenue that see why we need to start, you know, significantly growing.

35:21 And that's a pretty good overhead base to to certainly go soon this year. And then resource will be primarily focused on, you know, sales and marketing, go to market, which we do also have have a lead for that in Manchester and a lead for that for for countering. Okay. Thank you. That's all of the questions. That's great. Thank you for answering all those questions you can from investors. And, of course, the company can review all questions submitted today, and we'll publish those responses on the company platform. Just before redirecting investors to provide you with their feedback, which I know is particularly important to the company, Chris, could I please just ask you for a few closing comments? Absolutely. Thank you again for your your time today and outside that, you know, your continued support.

36:08 I've got across well that we've taken decisive action over the past year and that we're entering this year. It's a a much more resilient business, and we're being, like, super laser focused on what we believe will succeed and seeing encouraging traction within that across both counter and trading. And, yeah, thanks again, and I I look forward to continuing to to to update everyone on our progress. That's great. Thank you for updating investors today. Can I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations? This may only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team, we'd like to thank you for attending today's presentation, and good afternoon to you all.