Having examined the assumptions, we're now going to start the main model build. We're going to take the revenue from the segments.

We've got total revenue here in line 64, and we can take that and now migrated to the income statement.

You can see that the adjusted operating expenses are going to come from the EBIT, so we're going to infer them and you might be wondering why we do that, given that it's effectively a missing figure exercise or a plug. But recall that the operating expenses will drive some of the assumptions which will be linked to that, such as the payables and other operating working capital liabilities.

We can't get the EBIT yet because we don't have that in segmental reporting because we can't move between EBITDA and EBIT because we haven't got depreciation yet. If you look at the non-reoccurring items, they're actually contained on the segment sheet because they're reported on a segment by segment basis. So we'll skip that because that's part of the overall EBIT EBITDA movement as well. We've then got this PPA adjustment, which we haven't seen before. This represents the amortization of purchased intangibles, which are generated during M&A activity. These tend to get stripped out along with the other non-recurring items, but they will be recurring.

They will persist into the future, and so we need to take special care with them.

What we're going to do is we'll work on those going forward once we've done the segments, because again, they're contained within the segment, so there'll be a fair back bit of looping back and forth. Now we're going to act as if we've done all of that when we create our operating profit. It doesn't work yet, but at least it's there and waiting so that when we loop back it will all work.

Unfortunately, we have to skip another part. Now the financial expenses, and that's because we don't know what the financial expenses are going to be until after we've done our debt. We are yet again going to act as if we have done it so that we can get our subtotal going.

We're now going to do our income tax expense. It's a little uncomfortable because what we're going to do is we're going to create an ETR, which is the overall tax rate for the company and apply that to their profit before tax. We've now got the income tax expense and although we've got to be careful because there could be hidden errors in there because it's a zero, if we test it, we can see it's working okay and generating a cost. And so a little stress test there is a good idea. Zeros can hide problems, which can be very difficult to spot down the line when you have an entire model to check.

Now, satisfied that that's working. We'll move through to net income, which is not working yet, but will be once we loop back. And that leaves us free to go to the next section. The next section is recurring net income, which is useful for a range of metrics. We can pinch it from here on the left. We should however, try and understand what's happening there. The basics of what's happening are that we are going to take the net income in F40. We're then going to add on any non-recurring items, which in this case are in segment F74 and F75.

Now, if they seem familiar, it's because they're also here and here it is the non-recurring items and the PPA adjustment, which would also be non-recurring. Now, we'd add those back on to get recurring, and you can see that it's gone and fetched from the segmental information, but we need to be careful because those non-recurring items are happening before the tax line. You can see they're before the tax line here, and so they would be subject to tax. And so if we just add them straight to net income, we'd be misrepresenting. What we'd be doing is adding them on as if they haven't had an impact on tax where they have. So we need to assign a tax rate, which is that one plus F8 that you see within the formula to the right. We need to be very careful with it because F8 you'll notice is not the effective tax rate that we used before, but the marginal tax rate and the idea behind that is that the marginal tax rate is the rate paid on the next dollar, and it's more appropriate for moving things around or changes, which is what we're doing here. We are changing the earnings and so by adding back the costs, we have changed the tax at the marginal tax rate, which is distinct from what we were doing in line 39 where we were applying the overall ETR to the overall profit before tax. So this line hides a fair bit of complexity. Kion has had a fair bit of volatility in its dividends in the past few years, and that is as a product of some of the things that we were looking at in the segmental reporting, which is that it's experienced heavy volatility within the performance of its segments due to bonanza times during some of the disruptions to supply chains, some of the softness in demand and in the margins. And this has meant that they have had to swing their dividend quite wildly. Now what we are going to do is we are going to grow the dividend at the rate suggested in the forecast, and you can see that that is fairly volatile again, and we're going to grow that compared to last year. And so you can see the dividend per share there to get the EPS and the dividends. What we need is basic weighted average shares outstanding and diluted weighted average shares outstanding.

You can see that the basic weighted average shares outstanding is just given. So what we are doing is predicting here that there will be no issuance or buyback of shares within Kion.

We've then got the diluted weighted average shares outstanding.

If we take a look at it, you can see that this ends up being the exact same. There's a little bit of complexity hiding there that is worth talking through though. You can see that the basic weighted average shares outstanding will be those that are literally outstanding and in people's hands. It is the shares that are out there owned by shareholders. We then have diluted weighted average shares outstanding, and you can see that rolling forwards, we're going to take the proportion of what the historical, basic and diluted was, and we're going to roll that forwards. So if, for example, we had a bunch of dilution in 23, that dilution would be rolled forwards.

It's important that if then the basic went up, the proportion of dilution would also go up. And so that's what this set of formulae is doing. And if you're wondering what dilution is, this is the shares that are not currently in people's hands, but probably will be in the form of say, share options. Diluted weighted average shares outstanding is an important concept. In this model we are simplifying and we're saying there are no issuances or buybacks and there is no dilution. The recurring net income and divide it over the diluted weighted average shares outstanding to get the recurring diluted EPS, which appears to be taking a real nosedive. But that's because our income statement is incomplete.