Ladies and gentlemen, welcome, and thank you for joining Eurofins Half Year 2025 Results Presentation. Please note that this call is being recorded and will be later available for replay on the Eurofins Investor Relations website. [Operator Instructions] During this call, Eurofins management may make forward-looking statements, including, but not limited to, statements with respect to outlook and the related assumptions. Management will also discuss alternative performance measures such as organic growth and EBITDA, which are defined in the appendices of our press releases. Actual results may differ materially from objectives discussed. Risks and uncertainties that may affect Eurofins' future results include, but are not limited to, those described in the Risk Factors section of the most recent Eurofins annual report. Please also read the disclaimer on Page 2 of this presentation, subject to which this call and Q&A session are made. I would now like to turn the conference call over to Dr. Gilles Martin, Eurofins' CEO. Please go ahead.

Hello, everybody, and thank you for joining our quarterly and half year conference call. Well, I am happy to report on a good development in this first half year of 2025. We have achieved the objectives that we're aiming at in terms of growth and in terms of margin improvement, cash flow improvement and especially on the earnings per share improvement, which is very strong in the first half of this year. So we have a little slide show, and I'm on Page 5 currently. I'll do a short overview, and then Laurent, our CFO, will go a bit more in the numbers. But overall, we are happy of all developments in the P&L, organic growth and growth of margin. We are still in a phase where we make significant investments. We have acquired also some businesses. We have acquired a business SYNLAB. As you see in the publication of our balance sheet, we have details there for a fairly low amount, a very small percentage of revenues, but it starts from a loss-making position. And with our existing teams in Spain and synergies, we believe we can improve the margin significantly over the next 2 years. So it is, for us, a good opportunity to create value. It's a little bit dilutive short term, but it should be a good use of cash and provide a good return in our opinion. We started last year with a very high level of net working capital at the end of 2023. Which makes show maybe a bit less growth of the free cash flow from period to period, but that's due to this one-off effect. Overall, our net working capital produced in this first half year at the end of the first half year were lower than last year. Of course, the second half year, we generate much more net working capital. We have an improvement and we generate cash. So the first half of the year was good. It's not the half of the year where we generate the most cash traditionally, but it is positive on all aspects. One thing that was decided and maybe indicated yet is we will -- the company will acquire -- the companies under Analytical Bioventures, my private holding or private family holding. The company holding all the buildings that Eurofins use or except those that Eurofins doesn't want to use in the future, which will be exited. We thought about stretching that over 2 or 3 years, but our cash position is good. Our leverage is not high, and it will be done. We polled our investors. It was a formal vote that clearly stated that investors who really own shares at Eurofins would like this to be done and be over with. So we will do that in the second half of this year. We can afford it. It won't push our leverage too high. Also, it will save Eurofins EUR 36 million cash per year in rent. So by the end of our 2027 5-year plan, a significant part of the purchase price, almost EUR 80 million will have been paid back anyway by rent savings. So that's something that the company can afford, and we will put that behind us. And with that and the other sites building or acquisitions that are currently ongoing and we plan to finalize by 2027, we should be done. We're building an incredibly strong and efficient laboratory infrastructure in almost all the countries where we're active, a very nice hub and spoke model that will make us very efficient, provide very good logistics, very fast service to clients and economies of scale in the large labs. And this is one of the major capital outlay that we are doing in this 5-year plan, together with the capital outlay linked to full digitalization of our processes, which is going -- moving ahead, is almost finalized in our biopharma product testing and is making good progress in our food and environmental testing businesses. Clinical is the last business line where we started those developments. So that was a discussion on Page 6 on the real estate. So we were fairly neutral on that. The financial conditions have been disclosed in the invitation to the general assembly. So I won't go back on that. But if there are any questions, we can go there. Obviously, I was not involved in that nor did my holding vote in this decision. So the 95.6% of the positive votes are of non-family investors. On Page 7, we are talking a bit again about the -- our site ownership. And we do plan to complete -- I already talked about that, but we do plan to complete this building of our hub and spoke network by the end of 2027. And we will continue to do some in the first half of this year. We will do a few more in the rest of this year. And on Page 8, you have more details. We'll do a few very large sites in the Netherlands, for example, in Kansas and St. Charles. So we -- and Mississauga in Canada. So they will -- all those buildings have been ongoing. They've been drawing cash, and they should give us the benefits of more efficiencies by 2027. So we'll be pleased to have built a very strong network, very efficient company. And of course, we should get the benefits of all those investments in our efficiency, in our cash flow, in our growth by offering better service to clients, creating capacity, et cetera. So I think from now, Laurent will give a few comments on our financial aspects or -- what I can say on the overview on Page 9. First, we disclosed our business. Of course, we provide the total results and the total result, which is on Page 9, the last block, you see a nice improvement. But we also provide the result of our core scope, our mature scope and the nonmature scope that includes start-ups and companies that we just acquired and that we are restructuring heavily like SYNLAB, for example. And as you see, year-over-year, our mature scope continues to improve. It is already at a level of margin of 24%, which is our target margin. And the dilution from the nonmature scopes become smaller and smaller. And the SDI also are reducing. So we think this is all progressing as we plan. And we're looking forward to, by 2027, have a very small residual nonmature scope that will provide a very negligible dilution to the overall results. On Page 10, we comment a bit on our start-ups. We're continuing to open labs. It's always an arbitrage. If we buy a company, maybe it will improve if we don't pay too much our EPS immediately, it will be immediately dilutive, but we incur a lot of goodwills. The multiples haven't gone down significantly for large profitable targets. And so we always have the option to start a lab. If we are not in one region or one part of one country and we can't buy something there that we like, we know our lab looks like. We have the blueprint for a lab. We have good conditions when buying equipment. We can deploy our IT solutions. So sometimes, we're just better off opening a lab. So we continue to do that at a more moderate pace compared to the overall size of the company than before, but this is our plan to continue over the next 2 or 3 years. On Page 11, we discuss acquisitions. As you can see, we are frugal in our acquisition policy. We are spending less than we thought we would spend, not so much that we are going to get less revenues from those acquisitions because we are almost at the target for this year. But the revenue multiple is less, and we like that to buy a company that may be not fully at its peak in terms of performance, but we have the means from our teams, synergies, software purchasing to improve performance and create value. This is usually our target for acquisitions. It's not size per se. It's not having a certain percentage of revenues in this geography or that geography. This is only relevant to us. It's making our businesses stronger, buying sometimes nice technology businesses that complement what we have or winning new customers. And we like to buy businesses where we can really create value by improving the results over the 2 or 3 years following the acquisition. Laurent will now comment a bit on the specifics of the financials.

Thank you, Gilles, and good afternoon, everyone. It's my pleasure to walk you through the details of our first half financial results. On Slide 13, as you can see, we had a sustained growth of revenues at plus 5.7% and even stronger growth of our EBITDA at plus 8%. We also had reduced SDIs, leading to an adjusted EBITDA margin of 22.4%, an increase of 30 bps year-on-year. Overall, generating a significant year-on-year increase of net profit, plus 12% and of earnings per share at plus 18%. On Slide 14, you can find our revenue bridge for the first half. We had a negative FX impact of minus 0.7%, mostly linked to the USD-euro evolution in Q2. We had a solid organic growth of 3.9% and a good contribution from our M&As, EUR 49 million in H1, representing full year revenues of EUR 210 million. On Slide 15, you can see the breakdown of our organic growth by activity. The Life activities were growing at plus 5.7%. This remains a very strong growth, both on Food and Environment in all regions. Biopharma at plus 0.8% remains soft, and I'll share with you more details on this on the next slide. Diagnostics at plus 1.3% was impacted by the tariff cuts in France from September of '24 and the acquisition and integration of the diagnostic activities from SYNLAB in Spain. While Consumers & Technologies at plus 1.5% was mostly affected by strong comps in North America and trade tensions in Asia. On Slide 16, you can see a semester-by-semester evolution of biopharma activities around 3 buckets. We have what we call biopharma product testing, which is the largest bucket, discovery and genomics and ancillary activities. First of all, you can see that last year, we had a decline of ancillary and discovery and genomics activities in H2, while the BPT activities growth remained very solid, but overall, leading to a negative growth of 0.9% in H2 last year. While in H1 this year, we were able to renew with growth at plus 0.8% with a strong BPT growth, while discovery and genomics and ancillaries remain in negative territory. So overall, our main activity, BPT is growing well. It's hard to predict what it will be in H2, but at least we should be able to enjoy better comps going forward. On Slide 17, you can find a breakdown of our margins by region. Europe incurred a slight decrease by 20 bps of margins due to the French clinical tariff cuts in September '24 and the integration of SYNLAB Spain in Q2, which remains dilutive to our margins. North America continued to increase its margins by 140 bps to 28.5%, while Rest of the World also continued to increase its margin by 140 bps to 24.8%. On Slide 18, you can see the details about our H1 cash generation. So despite a strong improvement of net working capital intensity by 80 bps, we incurred a negative net working capital change due to the exceptional improvement of net working capital position between December '23 and December '24. Our total CapEx spend remained disciplined and flat, leading to a stable free cash flow to the firm of EUR 276 million for the period. On Slide 19, looking at our first half CapEx spend in details, we reduced our [ NTT ] by 50 bps to 6.9% of revenues, and we allocated the CapEx at 69% to what we call operating CapEx and 31% to investments in owned sites. On Slide 20, you can see that our net working capital intensity improved significantly by 80 bps to 5.5% of revenues, thanks to a reduction of DSOs by 3 days and stable inventories at 2.1%. And to conclude on Slide 21, we have refinanced in the first half our '25 Schuldschein and hybrid bonds. We have increased our leverage by 0.2 to 2.1 turns following the share buybacks, but remain well within our target of 1.5 to 2.5 turns. And we continue to have access to ample RCFs and enjoy well-spread maturities of our debt and hybrid instruments for the future. Now giving back the mic to Gilles to conclude this presentation.

Thank you, Laurent. Well, to conclude, we have 23 -- a slide where we, as in the press release, reiterate our objectives for this year and 2027. What you see with Eurofins is we have a lot to do internally. We are still building the house, building the company, building the infrastructure and integrating some of the companies we acquired recently. So even if the top line has been a bit lower in the last couple of years, especially in biopharma than what we were aiming for. And of course, we cannot control what our clients spend. There's a lot we can do to improve profitability. And of course, some of the spend we have that goes in OpEx on, for example, IT, development of new solutions, reorganizations, all of those things are also finite in time lines. So we're confident that we will be able to continue to improve our performance towards 2027. And we're also confident that there will be a pickup in biopharma. The industry, of course, is reevaluating its priority, which classes of drugs they fund, but we have very positive dialogues with our clients, which are mostly big pharma. And so we're positive that biopharma will [indiscernible] bottom in some of our activities like agroscience and genomics that have been hit by a new or different changes. It will also clean up those markets. A lot of the smaller companies in those markets will be very struggling. Some are disappearing, some are going bankrupt or being sold for very little. So we think we should be able to emerge with a very, very strong market positions in all our verticals by next year or 2027, which we should show in our sales growth, in our pricing, of course, and our productivity. So we are quite positive that we are executing according to plan, that opportunities will become more significant. And also all the CapEx that we're spending, when we have a building, we don't have to pay the rent anymore, and that applies to the related party buildings, but all these other buildings that we are constructing at the moment and will move in and occupy over the next 2 years, and the ones we did already, they replace rented buildings that cost cash. It may be a bit less visible in the IFRS statements because of the way the rent is being treated. But the -- we are optimistic not only improvement for the next couple of years, but also cash flow generation. This is also one reason why we pulled forward the purchase of the related party buildings because we are very confident on the cash flow future of Eurofins and cash flow trend improvement past this large investment program in buildings and in digitalization. We have infrastructure rebuilding of our business around more resilient, more segregated environments for each of our regional business lines. It's a lot of housebuilding that we've been doing for a long time, of course. And we are slowly -- now we are halfway through this program and -- but we are also slowly nearing the end of it. And we are confident we will harvest the benefits of all those investments. And at the same time, we don't see our competitors doing anything of that magnitude. There are -- many are owned by private equity with relatively short horizons, want to exit after 3 to 5 years. They are starting to struggle because many private equity companies overpaid for assets in our space, and they will be struggling when refinancing time are not collapsing, but they are not increasing either, which are starting to make exits very challenging, which means even less CapEx, even less investment for those businesses, even more squeeze on the teams that can lead to worse performance, client dissatisfaction. So on that end, that's good. And our corporate competitors, they are all too diversified. So they cannot make and it doesn't make sense for them to make the type of investments we are doing to offer better service to clients. So we are overall strategically and midterm, very positive about our outlook. But that's it for our introduction, and we can answer questions if there are some.

[Operator Instructions] Our first question is coming from James Rowland Clark with Barclays Bank.

I've got three, please. My first is on consumer, where your organic growth went from 3.5% in the first quarter to a small decline in Q2, which you've put down to the AI-related comps. Could you outline what the drag was from AI-related comps and whether there's anything else at play driving that deceleration? And how would you outline the outlook in consumer from here as a result of that? My second is in biopharma. And you've provided a sort of a bit of a breakdown of the organic in the first half across a group of verticals there. In discovery and genomics, it's declined to a 4% decline from 2% in the second half of last year. Is it fair to say that the discovery element of that has gotten worse in terms of the outlook in the second quarter? I guess maybe can you help us with the exit rate of discovery and genomics within that 4%? And then finally, you're facing an FX headwind this year, specifically -- particularly steep in the second half. Do you think you can deliver second half margins that are sequentially ahead of the first half? And maybe could you help us think a little bit about how the FX headwind looks for the full year? Can you deliver margin growth? Do you think consensus has a small decline?

Thank you. Well, consumers contains a number of things. It contains softline and hardlines. It contains electrical and electronic product testing, and it contains a significant material science testing and material science is on medical device, but it's also on electronic products on semiconductors, and there has been a very strong boost in the first half of 2024 due to a lot of CapEx, huge CapEx investments in AI data centers and so on, which has been a bit lumpy. So this business is always a bit going with the -- not all the cycles of semiconductors, but some of it depending on working on memory. We work a lot on tools company, providing tools for semiconductors. Maybe China had put forward at the time some purchases of a lot of equipment to manufacture semiconductors. So this can be a bit lumpy in this business. So the impact on consumer is mostly from that material science business. And also, we think there the comps at some point will normalize at some point and that should turn positive. On discovery and genomics, we're a bit affected in the U.S. in the genomics business. We don't work a lot for academia. We just have this small genomics business, which is doing -- producing oligonucleotide for testing, DNA testing and for research and providing also custom sequencing services. The research and academic to 40% of that business depending on the companies. And in America, it is doing very badly. There has been significant cuts in the academics budget. Universities are struggling, NIH is spending less. So that genomics business has been hit this year. And it probably will continue to be hit for the next couple of quarters next year. I think it has hit bottom in the meantime, but that's a bigger impact. Discovery is not dynamic, but it's not -- the situation for discovery hasn't changed materially, as I can remember. And the FX headwind, well, I'll let Laurent comment a little bit on this one. Of course, we don't know where anything will be, and it's not only the dollar, but there are many currencies moving. What we have, we have our costs where we have our revenues. So all of that is translational. And of course, if you reconvert our overall P&L in dollars, it will look better in dollar terms. So this is all a matter of from which perspective you're looking at it. But Laurent can comment.

Yes. I mean on H1, we know what is certain already. I mean we had an FX impact on the revenue of 0.7%. We had no FX impact on the EBITDA margin. And if we do a simple calculation, which is to simulate the rest of the year with the dollar as it is today, we would have potentially an impact on the top line of 1.7%, but still no effect on the EBITDA margin. We would have potentially a small impact on the free cash flow to the firm, but not to the level that it would be forcing us to revise our objective at this stage.

Our objectives are made at a given FX mix, and we don't know what it will be in advance. Nobody can know that, and we've been surprised more than once. So we will be -- it will be what it will be. We're not talking huge amounts when I look at the Excel sheet. But it could be that the dollar plunges 50% or the euro has big problems because Europe is not like in the best shape either. So it's -- we cannot change objectives every month depending on whatever we think the dollar might be, whether we're right or wrong. So we -- that's why we make objectives at constant currencies.

Our next question is coming from Suhasini Varanasi with Goldman Sachs.

Just a couple for me, please. Can you maybe discuss how you see the drag from SYNLAB Spain in the second half margins compared to what -- compared to the drag that you saw in first half? How should we think about potential improvement? And second question is on the medium-term target, where you've reiterated your guide for 6.5% organic growth by 2027. It kind of implies a pretty strong acceleration in '26 and '27, given the slower growth that you saw this year and last year. Can you maybe help us understand what gives you the confidence that, that will drive faster growth? I think you had mentioned larger contract wins in maybe biopharma, ancillary services, ancillary activities. Is there anything else that we should be keeping in mind?

Thank you very much. We had only 1 quarter of SYNLAB in the first half. And we don't think SYNLAB will very significant reorganization measures. And so I can let Laurent comment on it specifically because he has looked at it more.

I mean the impact on the first quarter of integration on our result for H1 was about 20 bps of dilution of our margins. Going forward and taking into account the restructuring that we need to perform, we will have an impact in the area of 60 bps for the full year.

And of course, we -- all those costs and reorganization, they will have a positive impact once we have removed the costs that are due to duplication of labs of sampling points, blood collection points, et cetera. On the medium term, we have a number of businesses right now that are not in positive territory. So if you remove that, at some point, they will at least hit bottom, flatten out and start growing. And if you remove the minuses, that has a very significant positive impact. We've had a very significant cut of revenue in clinical in France that was a big one-off this year that has affected the fourth quarter of last year and will affect the first 3 quarters of this year. As I already commented, we do feel biopharma will pick up and actually parts of our biopharma is very healthy. And then we have all the benefits we expect from the end of all our reorganizations and IT deployments. When we deploy new IT systems, it is extremely disruptive for the business. Things are not working as expected. You have outages, you have systems that -- you have users that are not so used with a new system. We -- our service to clients is usually degraded every time we deploy a new system for 1 year or 6 months to 1 year, we have a decrease of productivity and quality of service to clients. But once this is all bedded in, we get significant improvement of service to clients. Also, our competitive position is going to improve significantly once we're done. So we think there are a number of reasons why growth could continue to accelerate. Now of course, there is an element that is unknown is what inflation is. The 6.5% includes some element of inflation increase compared to when we had a 5% target objective. 1% inflation, 1%, 2% inflation. So 6.5% assumes more like a 3% inflation or something like that. But it's a secular target over a number of years. So when we get back to normalcy, when normalcy will be with all the elements in the world and global aspect is hard to know. What is clear is we do things that are recurring and stable. Whether things are produced in one part of the world or another part of the world, they have to be tested. There might be some transitional issues. People are waiting. There's a lot of waiting at the moment in many areas. People are waiting to see what the situation will be before they invest, before they decide anything. But this at some point will normalize, and we're confident in the growth potential of our sectors. And yes, there are -- we had some real one-offs at the back end of last year that ended that will normalize in terms of comps in the [indiscernible].

Our next question is coming from Carl Raynsford with Berenberg.

I have three questions, if I may. The first is just going through the growth commentary. There's no mention of diagnostics in the U.S. or rest of world from what I could tell. You call out diagnostics is broadly flat in Europe, but I calculate the organic growth to be around 2.5% in Q2 and you adjust for the working days there. So that implies U.S. and Rest of World at a high single-digit rate. So I just wanted to know if that's a fair way to be thinking about it and what the drivers are really through the first half. And the second question is just really a follow-up on consumer. Have you seen any sort of material impact on the softline hardline volumes because of tariff uncertainty? And the last question, I know you're very confident on cash flow, but would you think about another share buyback if market valuation was soft, but it meant that leverage wouldn't hit the sort of 1.5x by 2027. I'm just wondering what the main priority is in terms of cash really there.

Thank you. Well, I'm not sure I fully understood your calculation on diagnostics, but Laurent can answer. I think he understood your question.

Yes. Thank you. I mean, Gilles. I mean, our growth, I mean, in North America for what we call diagnostics was closer to about 3%, 4% organic growth in the first half. I think -- because I saw your e-mail to Bernard in the meantime, I think you had a bit of weight between the regions on that segment, not totally correct, but Bernard will follow up with you.

Then on consumer, we don't see so much of the tariff impact on softlines and hardline. It's a small business for us. So it can depend on 1 client, 2 clients. We are winning share. We are winning new nominations by clients being a small player, but a small global players, one of the few global players. We should have a nice runway to grow our consumer because the clients want alternatives to the semi oligopoly that exist. And on share buyback, we will be -- we try to always make the best decisions for our shareholders. And so I cannot say what our decision will be in 6 months or 12 months or 3 months. We try to -- we know the value of our assets. Eurofins has different verticals as a number of assets, and we know what they are worth, all those assets. So we see that we are still today after our share, rerated a little bit very much discounted to -- compared to the market and to private transactions. So we have a very significant discount to peers in the market in EBITDA multiple and even bigger discount to value when we look at the value of our different assets on private markets for full transactions. So we are very safe when we do buybacks at the valuations that we have because we know if we ever need cash, we can always sell an asset and do even more buybacks. Now when the gap will close, we will see. The markets are volatile, and we've had -- we've been hit by the number of factors since the war in Ukraine and the softness in biopharma. So we will consider buybacks. Indeed. This is something that's an option, but we also don't want to exceed our 2.5x leverage. Also, as I mentioned earlier, we think we will come in a phase where our cash flow will increase significantly and especially in 2027. Once we're done with all this CapEx and there is much less cash flowing out. We have very significant levels of EBITDA. It's not that we don't generate cash, but we invest that cash to build the house, to build the business. But at some point, the house is built, and we use much less cash to do that. So it's a bit -- it's an answer. I cannot give you an answer because it depends on a number of parameters at any given time or share price or acquisition options or opportunities, different opportunities. But we are a steward of our shareholders' money, and we try to make the right decisions. And if you look at the buybacks we did in the last 12 months, we could buy back our shares, I think, on average, around EUR 50, and we think it's really good value. It's a very good investment for our shareholders. Another factor, if I may add, because people look at different numbers. They look at EBITDA multiple, EBIT multiple and EPS multiples. It's all very interesting. One thing, if you compare Eurofins depreciation schedules with other listed companies, we also depreciate very fast. We are conservative in our accounting. And if we were depreciating at the same speed than others, our EBIT would be even higher. But we think EBITDA is a better proxy. That's the cash we generate. And we know why we do CapEx. We know what our maintenance CapEx is, which is fairly low at about 2%. So that's why we know when we buy businesses, that's how they are valued. And so if you look at our EBITDA multiple, we are still trading probably at 30% discount to the market, which we don't really see any long-term justification for.

Our next question is coming from Remi Grenu with Morgan Stanley.

Just two remaining on my side. On the M&A, I think you referred to the fact that it was quite an active environment in the first half of the year, almost doing a little bit more than EUR 200 million of revenues acquired there. So should we assume a quiet H2 or you're still very much willing to engage at the same pace and get the opportunities you're seeing there? So that would be the first one. And then the second one on the central lab activity and the comments you were making on some of the programs already contracted and likely to start in the second half of this year or 2026. If you can elaborate a little bit on that and the discussions with customers and what kind of visibility you've got and what it means for the recovery of that part of the business?

We don't provide guidances. We provide -- we share our objectives, that's the objective that our teams have, both in terms of organic growth, profits, et cetera. And the reality is whatever markets, clients and so on decide. In terms of acquisitions, M&A, this is even more true. We don't know what we will buy. We know that most likely adding EUR 250 million revenue each year -- revenues each year from acquisition is achievable while being very disciplined on valuation and acquiring assets that can create value. Maybe we'll do a bit more than EUR 250 million this year. We have -- our teams are active. We look at many small bolt-ons that are valued at levels where we think we can generate very good return. We have a hurdle rate of 16% [indiscernible] in year 3, when we bought a company. And so that's a high bar. So we pass on many assets, but we look also at many assets. As I mentioned, there hasn't been a collapse in valuation of the larger, more profitable assets. On the other hand, there are also very few transactions and many transactions get aborted. People think they're going to get a deal and then the buyers are in then not closing or not signing. And so it's a bit of a wait and see. A lot of PE have trouble exiting their investments. Some of them will have to do either bankruptcies or the lenders will take over or they'll be negotiating with the lenders. There are some of those things happening at the moment. And we're quite happy that nothing happens because, frankly, now we are focusing on putting the house in order. That's not the moment where we want to do a lot of M&A. And -- but by 2027, we'll be very efficient, lean and mean, and we'll have better IT tools to deploy in acquired companies to extract more value. So that's a question, and it's an answer on M&A. And central labs, yes, we have good discussions with clients on that. Of course, when exactly their programs start is in central lab, if you look at Covance, Covance now is part of LabCorp, it's very hard to time exactly when studies start. But so that's what we wrote was is what we believe at the moment for some of the larger programs.

Our next question is coming from Neil Tyler with Rothschild & Company.

Hopefully, you can hear me -- it's a bit cracking my end. I wanted to ask a question sort of about the medium-term margin objective, Gilles and Laurent. If you were to sort of bucket the components of margin improvement that you envisaged back in 2022 that would get you to the 24%. And I'm thinking things of, I suppose, cost savings, operating leverage from volume growth, efficiency gains from the digital investments and any other you want to add to that list. Can you perhaps talk a little bit around those, how they have materialized so far compared to what you expected? I suspect operating leverage has been less, but some of the others are probably on track. And what's left in the locker in terms of the contribution from each, if -- hopefully, that question makes sense.

Yes. I think we still have a long way to go in Europe, especially. You see in the U.S., the benefit of putting your house in order. We have put the right footprint in place in the U.S., hub and spoke. We have the right locations. We can still add more. We don't cover the full territory of the United States, but we cover a large part of the United States. It's easier to have the same software, the same processes, et cetera, and get the scale. In Europe, we're still doing that. And Europe is burdened by very significant IT investment and still some site rationalization. We still also have a number of situations where our local leader may not be doing a very good job, and we still carry some reorganization, loss-making companies. So we do believe this, the streamlining of our network in Europe and the finalization of deployment of more standard and more modern IT solution will go a long way to bring the margins in Europe much closer to what they are in America. Americas still have potential to improve, but it is already at a very good level. So that's -- and then on top of that, of course, once this is all done, you're going to have operating leverage, you're going to have the benefits of more organic growth. We are still not great at selling. So this is also we focus more on operational excellence because we provide quality, we have our operations and the quality of the results we provide is the most important. The timeliness of the results we provide is the most important. So that's why we put so much CapEx in our labs, in our IT, in our digital. But there's a big improvement potential in how we go to market, how we approach clients, how we market, how we win share. But we first want to have excellent performance everywhere before we unleash even more commercial activities to win and convince new clients. And then you still have the significant business that is not outsourced by clients. And one thing that could happen is if our clients get squeezed and the squeeze continue, they might consider more outsourcing. There's still a significant amount of work that is in-house at our clients that should be economically and for many other reasons, outsourced. So that's some of the thoughts we have about future margin improvements. But we are already very close. If we just got our not mature scope in order, and that will happen over time, we are already where we want to be in terms of margin.

And just perhaps by way of follow-up and picking up on some of those comments about the commercial approach. You've mentioned in the past year or 2, the increased emphasis on pricing and how obviously, a couple of years ago, the inflation created a bit of a squeeze. Are you -- I don't want to use the word satisfied, but are you sort of happier now that the pricing approach is more sort of embedded in the commercial approach to customers than it was back then? And is there sort of further room to grow there?

Yes, we have made progress. It's not perfect, and we also had very long contracts in some cases, but it is much more accepted by clients that we raise prices every year and potentially midyear with indexing and so on. Not where we want to be, and we certainly do not push our pricing at the moment. As I said, our philosophy is, first, get our house in order, provide the best performance possible, finalize the digitalization, which might mean for some adaptation to new systems and so on. That's not the time where you maximize pricing. And price has to basically be the recognition of savings for our clients, efficiency for our clients and the fact that maybe if we interconnect our systems better with their systems, they're going to save a lot of money on their side. And maybe we can in-source some of their labs and make them save a lot of money. So it's all a complex thing, but we are getting much more mature at that. One of our goals by 2027 is also to be able to exactly measure how much price we gain every year, which is imminently complex when you sell projects that are not comparable from year-to-year. But if you tackle the matter directly from the quotation time, there is a way to do it that we are piloting at the moment, also in our project-based businesses. So there are a very large number of initiatives that are costly and disruptive that we are carrying out at the moment to improve our measurement of pricing and profitability by client, by contract, by project, et cetera. So we have -- we're not great, but we are better. I think also there, we're going to achieve things that no other player will achieve, especially at that scale, but it takes a long time.

Our next question is coming from Arthur Truslove with Citibank.

Three for me, if I may. So first one, just on the biopharma situation. Thanks very much for providing the situation around the comps. I guess, is it reasonable to think based on what you provided that if things sort of broadly stay as they are in the second half, biopharma could grow 3% to 4%. I guess, is that plausible? And does that -- do you see any kind of market recovery in that biopharma segment? And if not, when do you think it will happen? Second question, slightly technical. If I go to your definition of organic growth in it's #13 in your release, there's an additional sentence, which says all revenues from discontinued activities/disposals in both the previous financial year and year why are excluded from the calculation. Are you able to just confirm that there's been no change to the organic growth calculation? And then final question, there was some commentary that maybe there had been some sort of cyberattack on your business in the Netherlands. I just wondered, is that situation completely resolved? Were there any financial implications? Just wondered if you could comment on that, please.

Thank you. We're not in the business of making predictions business by business for the second half. We do think we'll have a better base, better comps for the ancillary activities and the part of biopharma and agroscience that are the most challenged. Whether it's going to be 2%, 3%, 4%, I don't know. If you look at the other -- I think you could look at other peers that are in biopharma that are even more like Thermo Fisher just published today, and they seem to have also a little bit of a pickup. But the -- how fast the pickup will be and the impact. The core of our biopharma is doing well, is growing double digit, not double digit, but above mid-single digits. It's mostly ancillary activities that are a bit lower. And first, the comps will help. And then if we, in clinical gain new large contracts, this will be helpful, too. No, we have not changed anything in calculation of organic growth and discontinued is completely marginal. It's -- we haven't discontinued anything huge recently. And yes, unfortunately, sometimes businesses that we acquire, recently acquired businesses until they have been put to our standards can be victims, full victim of some cyberattacks, but we haven't seen anything that could be material at this stage.

Our next question is coming from Allen Wells with Jefferies.

Three for me, please, if that's okay. Firstly, just starting with a kind of CapEx investment question. I noted in the slides, you flagged -- you added 30,000 square meters of lab space in the first half. I think the guidance in that slide suggests there's 157 to add out through to 2026. So if you average that out, it's about 50-plus thousand square feet every half year. So it's quite a meaningful step-up in lab investment over the next 3 half years. So I just wonder what we need to read into that in terms of the overall outlook for CapEx. Just mindful that the CapEx number in the first half is down year-on-year. So is that CapEx investment going to need to ramp a little bit to hit that 157,000 square feet target? That's the first question. Secondly, just to kind of follow up on a question, I think Arthur flagged just around that changing definition of organic growth, which I think was actually changed at the full year where you exclude the discontinued disposals. It looks like that was about a 30 basis point benefit to organic growth in the first half. Could you maybe just talk about what the rationale for adding that slight changing definition now? And is there any reason we need to think about like the appetite for discontinuing or disposing lower growth assets moving forward? And then finally, just a clarification question just on SYNLAB. Laurent, I think you said it was a 60 basis point dilution to margin in the first half. My understanding from an accounting perspective that SYNLAB goes into the group at 0% margin at breakeven and that the losses are accounted for below the line. So EUR 140-ish million of revenues at 0%, it's about a 40 basis point dilution or 30 bps for the 9 months for this year. Am I misunderstanding that? I just want to try to understand what the dilution is and how we should think about the shape of that headwind through the second half as well.

Thank you. I don't think I follow all your calculations, and I think Laurent already answered for SYNLAB, but I will give the answer back to Laurent on that. On the buildings, this is what is planned. When it gets completed and the timing that could run over to 2027. So it's always a little bit difficult to find the time line of buildings. And if you look at previous publication, we -- on that one, we always have a lot more planned than what we actually can deliver in the time line. So I'm not sure it's going to be a material pickup of how many we add per half year. It could be a little bit. That's why we have the budget of EUR 200 million. We are until now quite EUR 200 million per annum spend on additional buildings. But I don't see something super material -- now on your 2 -- I don't understand the question on organic growth because nothing has changed at all. But Laurent, I'll let Laurent answer that and...

Yes. So we didn't change any calculation or definition on organic growth. I mean the small change in the wording is just some clarity required by the auditors, but there is no change to the calculation. And we can follow up offline if you want to see what is making this impact that you just mentioned. On SYNLAB, what I said is that on the H1, we only consolidated 1 quarter and the dilution to the first half results of the group was about 20 bps. On the full year, we foresee about 60 bps. It's not going to go below the line because most of the dilution is coming from restructuring cost, severance cost or basically a poor performance, which goes above the line. And this is what we have. So this is indeed 60 bps for the full year. And you're right on one thing. This is only 9 months, 3 quarters because the first quarter, it didn't belong to us.

We will take our final question today from Delphine Le Louet with Bernstein.

I got some questions for you and probably more into the year -- into the midterm and obviously, well done on the margin acceleration. So when you think about the shareholder return and the breakup and the policy we should have in mind between the buybacks, the dividend and the growth, what should be the priority tomorrow versus what has been the priority in '25 or probably in 2024 also? The second question would deal with the CapEx and how we should think about the CapEx, 2/3 roughly is dedicated to the OpEx and 1/3 to the footprint expansion. And so we are coming to an end in Europe. What's this going to look like in 2 years? Should we think about this replication in other regions? Is it about thinking? How should we think about that envelope? And finally, the question regarding the biopharma and because we had a very interesting day yesterday on the CRO space. It's taking a bit of time to see, and we do understand it's not easy to get long contract and big contract with the pharma business. But how should we think about going into new agencies and switch a bit out from the genomic business to probably more regular business when it comes to the biopharma?

Thank you very much. Well, in terms of shareholder return and how we allocate cash, we are very simple on that, and we haven't invented anything. I think a long time ago, Warren Buffett said good businesses are businesses where you can deploy a large amount of capital at high rates of return. And so that's basically our driving thing. If we see areas where we can deploy a lot of capital at good rates of return, we think a 16% hurdle rate is good. Organically, we're more at 30%, 40% return on the organic capital we deploy M&A, it's hard to do much more than 16% because multiples are high, especially only within 3 years. And so this will drive our decisions regarding dividends, buyback, et cetera, is what are the opportunities for growth -- if there are enough opportunities to deploy a lot of capital, we will favor internal investment, organic or M&A. If we think the returns on -- especially M&A are not good, we might use our cash more to return it to investors, whether it's dividend or buyback. And on CapEx, yes, indeed, when we are done with adding those buildings, we think we'll be done not only in Europe. And by the end of '27, this is the program for the business as we see it today. We might still do a little bit incrementally when we do M&A and they have sites, we will also try to put them into own sites over time, at least for the big labs, but it won't be the same order of magnitude that we plan now for EUR 200 million per year. And biopharma, genomics is a small business. It's -- I don't know, EUR 60 million, EUR 80 million, and they have a number of verticals. The academic part is a very small part. And indeed, we are moving out of the academic part. We're keeping what we have, but we don't expand that very much. The bulk of our business in genomics is pivoting more towards diagnostics, so providing and also sequencing, providing the probes and the kits for all those diagnostic applications and sequencing applications. Also, there's a need for biopharma for mRNA and other things. So we have a lot of -- a number of applications for end markets, for example, for environmental, for food testing. There are a number of adjacencies where we are already active. But indeed, our genomics, which is small, is going more industrial. And biopharma, we are not really like other CROs in the Phase III and the large clinical trials. We have a small central lab. It's also sub EUR 100 million. And this is a bit more volatile, that thing because of the size of the studies, especially if you're small. But the bulk of our biopharma is very recurring. It's biopharma product testing, and we see that continuing to grow well. So I hope I answered your questions.

This is all the time we have for today's question-and-answer session. I would now like to turn the conference back over to Dr. Gilles Martin for closing remarks.

Thank you very much. Thank you, everyone, for your questions, and I hope we could answer adequately. You are welcome to follow up with Bernard or with Laurent, if you have some calculation questions. But nothing is changing in the way we produce our numbers, we account. We try to be very conservative on all aspects. And over the years, we've added more disclosures. We give you information by area of activity in addition to full segment remains the biggest difference. But we are open to any suggestions you may have. And with the sale of the real estate to the company, one thing that was a nuance point for some of you is going to go away at the end of this year. So we think we will deliver a very strong company at the end of this year on all aspects, including we've added a Board member -- any aspect that was considered nuisance value by some observers. And so we're quite happy about what we are doing, what -- how things are going, considering the world is still a little bit shaky and uncertain in many areas. We are happy to be in sectors that are not really affected by tariffs and all those things that are very resilient also in case there would be a recession. And we're very optimistic that biopharma will pick up. And as you see, the core of it in our business is already doing very well. So we're continuing to build the house, and we're getting close to the end of the program. 2026 will be the year before last. And in '26, we should start to see some of all those benefits and even more importantly, in 2027. So I will meet some of you tomorrow in London. I'm looking forward to that. And for those of you that I won't meet, I wish you a nice summer break, and I'm looking forward to talk to you in the fall when we will come back. Thank you very much.

Thank you. Ladies and gentlemen, the call has now concluded, and you may disconnect your telephone lines. We thank you for joining, and hope you have a pleasant day.