We're going to move to the main operating model build.

Now on the model tab, the main areas here are r and d, which can be very significant for industrials.

We'll also need to unify some areas from the segment tab, and we'll need to loop back to the segment tab once we've got depreciation, so we can move from segmental EBIT to ebitda.

At the bottom, we'll also have a look at some key metrics that will reveal some of the performance of Keyon past, present, and future.

First, we'll run through the assumptions.

You can see that r and d is significant for Keon.

This represents them fine tuning their products.

This is an industrial company, and so their r and d is to quite a large degree development.

Keon is an IFRS company, which means that it's able to capitalize its development.

This is not pure research.

They're not trying to reinvent a forklift truck from nothing.

They're trying to develop or improve their forklift trucks and other products, and this means that they're able to capitalize some of those improvements because they can demonstrate a real use for them.

And this distinguishes research which has no clear use and needs to be expensed to development, which has a clear end use and can be capitalized into an asset.

Avoiding hitting p and l.

It will turn into an intangible that will then amortize, and this can cause comparability issues between IFRS companies, which can pursue a capitalization strategy such as the one we're seeing here, and US gap companies, which broadly speaking cannot capitalize their r and d.

Most of the other assumptions are fairly standard.

Ones that are perhaps a little different in this sector that we could discuss a bit more are the PP and E as a percentage of revenues, which is much higher than some companies that you may be used to.

I tend to see in models percents of about two, 3%, whereas in this sector, it's very common to have much higher purchase of equipment. Because this is a capital intensive sector, this means that pp and E and how it depreciates will have a high impact.

On this model, you can see that the receivables days is relatively high, and this makes sense because these are big ticket items which have long credit periods, and this would also perhaps include some of the credit that's being extended by the financing arm of Keyon, which is not particularly well disclosed, and so we are not splitting it off as a separate segment.

You can see that the inventory days are also quite high, and that makes sense because it would take a while to transport this stuff.

Moving it around is difficult, and so finished goods will persist on the balance sheet for about 60 days.

You might be wondering where the payables days are.

They have been included within this metric here, current operating liabilities as a percentage of operating costs, and so this would contain payables, accruals, that kind of thing.

You can see that there's a fair amount of movement within Kons long-term debt balances, and this is going to be quite interesting later when we have a look at their gearing or leverage.