We're now ready to start tying off some loops. We've got the depreciation, which we'll have as a positive, and we've got the amortization, which we'll also define as a positive.

These two need to be migrated over and apportioned to the relevant segments, so we can move from EBITDA to EBIT, which we want to do.

However, we would like that stuff to be clean, and so we would like to extract the purchase price allocation as in the M&A related amortization. And so what we're going to need to do is modify the depreciation and amortization by the PPA adjustment. Over here, you can see I've had to go to the segment model because that's where we're keeping it.

We may have put the PPA adjustment within the assumptions of the main model instead, but we've placed them here because they flow quite nicely when moving to the overall reported EBIT. At the bottom of the segmental tab, you can see I've just had to flip the sign on the PPA to strip it out. If you're wondering why I've done that, it's to strip it out, we can then pinch the year on year change and we can pinch the adjusted EBITDA, which right now is not exactly working because what it wants to do is modify the EBIT, which isn't complete yet. We've now got our clean depreciation and amortization excluding non-recurring items, and we're going to migrate that over to the segment tab.

You'll recall that we did some work on revenues.

We then found the EBITDA, and we did that because the data provider contained EBITDA margins, so we couldn't go straight to EBIT margins because we didn't have a really good view of the EBIT margin, and that's why we're starting with EBITDA and then moving ourselves from EBIT and EBITDA.

You can see that the mechanism of what we're going to do on line 33 and 34 is as follows. Historically, the difference between the EBITDA and the EBIT was 852, which means that the clean depreciation and amortization, okay, was that figure. We can then relate that to the total depreciation and amortization of the whole business, and we're doing that up here. You can see it refers to model E50, which we track, and it is the total depreciation amortization cleaned up. So what this is saying is historically ITS would attract by far the lion's share of depreciation and amortization, which makes sense given how capital intensive it is. We can now roll that relationship forward and we can say, if we're going to attract 89% of the total depreciation and amortization cleaned up for non-recurring, Then we can model out the depreciation amortization.

We can now move between EBITDA and EBIT and we can generate the margin.

I'd like to see that in the remaining years as a bit of a reasonableness or sanity check. So what I'm going to do now is take all of the work that we did in the p and l so far, roll it forwards so that it can support the work in the segmental tab. Then take all the work in the segmental tab that we've done so far and roll it forwards as well. And you can see that what we're predicting is that the EBIT margin is stagnating and getting worse, and so perhaps ITS is going to face some problems of mixed price or other items of revenue compared to their costs.

We're now going to apply the same relationship with SCS, so the automation part of the business, we're going to say that it attracts much less terms of depreciation and amortization. We're going to let that take a proportion of the clean depreciation and amortization.

Then we're going to move between EBITDA and EBIT and we can roll on the margin and you can see that it's much the same story as the EBITDA margin. This is a business that's on the up. They're doing quite well. They're perhaps creating scale and diluting fixed costs. They're reporting that they're selling a better mix of high margin products, and we now have the overall EBIT for both segments.

We'll now move on and create the total EBIT. The first thing we'll do is go and fetch the EBITs we just calculated from the two major segments.

We'll go and grab the EBIT for SCS and we'll add it to the EBIT from ITS.

What we'll then do is apply the same logic in terms of elimination to get rid of costs and then profits, which are inter or intra group as in sales between parts of the group that make no sense from the kind of perspective we're thinking about now. 11.5% of the EBIT would be intragroup and so to be ignored, and then we can add that to the running total and then roll forward the margin.

You can see that the margin is holding steady, and that's a combination of the increasing margin, but in a smaller part of the business SCS and then the languishing margin in ITS and without the segmental reporting, that level of detail would be missing and we wouldn't be able to comment on the segments individually. And so this kind of segmental tab is very desirable for an industrial company which has diverse operations with different performance profiles. We can now reconcile to the reported EBIT as in the operating profit, and this really is a kind of check so we can roll forwards and you'll see that what it does is it minuses off the costs that we've been ignoring so far, and so in their P&L we would expect to see a reported EBIT or operating profit of the following. And this concludes the segment tab. We can now migrate some of that information over to the model.

You can see in the income statement, if we chase this adjusted EBIT, it's going to the total adjusted EBIT in the segmental tab, so that works and we can keep going with it, and that really starts to create a lot of richness and fill in some blanks. We now want the operating profit i.e. the reported operating profit, the reported EBIT, and we can grab the non-recurring items and we can say, okay, here we are. Here's our reported operating profit. You can see that's revealed an error, which we'll need to fix by redoing the sum line.

We can now roll forward the operating profit, which would include those non-recurring items, and we can then check that against the operating profit prediction at the bottom of the segmental reporting, and we could in fact build in a check sum. You can see that in 24, we've got 812, and in 24 here separately calculated the same kind of way, but in a different pathway. It's a useful check and it shows that our tabs are working well.

It's worth noticing that the PPA adjustments are rolling off. What this represents is past acquisitions which have generated intangibles, which are amortizing because we wouldn't predict any more acquisitions in our model, we tend not to predict M&A activity. It means that the PPA adjustment, the amortization of acquired intangibles would start to disappear Over time. We still have a gap for the net financial expenses, but now what we've got is a functioning P&L going all the way down to diluted EPS. You can see it's on the high side, but that's probably because of the gap of financial expenses and everything is already starting to work a lot better.