We finished our paint segment, and so that's decorative and we're about to do the same because we can't do depreciation and we can't do ebitda, and so we're about to do the same onto the performance coatings.

And what I suggest that we do is pause the video and try and use the skills that we've built up during the first segment and then have a go at the second segment.

So if you'd like to pause the video now and attempt to do that over the next five to 10 minutes, you can then unpause and see the result.

Okay, so some good figures to check then would be the total revenue and the EBIT margin.

If any of those are wrong, then that's good indication that you've maybe made an error somewhere along the way and that you need to download the solution file and take a look at it and see what's gone wrong, assuming you got it right, let's talk it through.

Overall, the performance coatings segment is going to do a little bit better than the paint segment in 2024, and that's partly due to what it is.

If you are an owner of a yacht and you are lucky enough to have one and you are thinking about barnacles growing on it, then you may get some very fancy paint from Axo to stop barnacles growing on it.

If you are building a bridge, you may be casting concrete, which needs to have a very long life, and you may be adding additives to that.

So you may be a construction company.

If you are creating an F1 car, then you may put very special paint on it to make it go faster, and that would also be performance coatings.

If you're doing powder coating or doing some sort of industrial scale painting, then you may have to deal with Axo in this segment instead.

Now, because of that, it's subjects some different dynamics than the first segment.

We said that China is really struggling, and that's as a consequence of a perceived weakness in real estate in 2024.

Now that weakness is not being experienced by performance coatings, and that's because Chinese industry and its relationship with Axo is very healthy.

And so where the paint segment was really struggling in terms of volumes in 2024, there's modest growth.

We can also see that slightly surprising relationship between a reducing cost and an increasing price, which we would not normally see, but we can see that Axo has form with this and previously has not passed on raw material decreases to its customers, and that is also predicted to be the case here in this segment.

In terms of EBIT, you can see that some of the stats being dropped through and the operating leverage are group wide and shared with that other segment.

Ideally, we'd really like to understand in detail the drop through of both segments individually, but we just don't have that level of detail available to us here.

In terms of the cost that we do understand a lot about raw materials, you can see that there is a decrease in 2024, but that decreased is slightly more modest than the 2.7 decrease that was experienced by paint.

And again, to understand that, you'd really need to drill down into the detail of what's going on here and what the raw materials are.

We said earlier that paint is chiefly made up of titanium dioxide and so will be very much linked to that market and to a lesser degree to hydrocarbons such as oil and gas, which make up some of the solvent based or resin based ingredients that go into paints.

The breakdown is much more even in performance coatings, so that means that this segment is much more tied to hydrocarbons, which was predicted to have a slightly less stormy year in 2024, and that's why the decrease is slightly more tamed in 2024.

And why raw materials have a different profile going forwards because of the volume increase and other better increases or less worse decreases in 2024.

You can see that 2024 is rather a good year for performance coatings.

Historically, performance coatings has been slightly lower margin than paint, and this would make sense because if you think about selling paint straight to the end customer, then you can take all the margin.

Whereas if you're selling performance coatings business to business who are then selling to end customers often through quite a long supply chain, then margin is being potentially taken at every step.

And so it's not a surprise that these would potentially be lower margin products.

However, because of 2024 being a good year for performance coating, they briefly overtake paint in terms of EBIT margin and then subsequently settle back into being slightly lower.

And again, having the detailed bridge work here helps us to understand why that's the case and why these two divisions or segments differ from each other.

And with that, given that we can't do depreciation yet or ebitda, we are ready to move on to corporate.

And then tying up this tab, a segmental business like exo often have a head office which has its own forecast, and this is the case here.

You can see that the head office is almost entirely a cost center, and this would represent some of the central functions that the head office is performing for the other segments, marketing, finance, that kind of thing.

Historically, there's also been very modest revenue, and this is potentially because of this other.

It's possible that there are parts of Axo, which are small enough and distinct enough not to warrant having their own segment, but also don't fit particularly well into the other segments.

For example, in around 2018, Axo divested from one of its major segments and there may have been little Bits of that left that made its way in here before being disposed of themselves.

You can see in terms of calculation, there's nothing for us to do here.

We've got the forecast, which will give us the EBIT.

We can't do the depreciation yet and we can't do the ebitda.

The totals have been done for us, but in the empty file, you'd need to do them yourselves.

What we'd need to do is go and fetch the total revenue from the three areas and the total EBIT.

We're not ready to do the EBITDA yet.

You can see that in terms of total revenue growth, potentially the recovery from COVID or a renewed interest in DIY from being at home for so long has meant that 2022 is a very good year, followed by shrinkage in 2023, and then a modest return to growth in 2024.

Now, we already know some of the detail that goes into that.

For example, the troubles in the Chinese market in terms of paint, but without the revenue and EBIT bridges and segmental reporting above, it would be very, very difficult to give enough analysis to this and enough accuracy.

And so hopefully this really helps to reinforce the idea that bridges and detailed segmental reporting are very important for a diversified operation such as Axo.