Kloeckner & Co SE

Quarterly Report • Nov 6, 2013

Klöckner & Co SE A Leading Multi Metal Distributor Klöckner & Co SE

Interim Report as of September 30, 2013

KLÖCKNER & CO GROUP FIGURES	2
INTERIM GROUP MANAGEMENT REPORT	3
KLÖCKNER & CO SHARE	14
CONSOLIDATED STATEMENT OF INCOME FOR THE NINE-MONTH PERIOD ENDING
SEPTEMBER 30, 2013	16
STATEMENT OF COMPREHENSIVE INCOME FOR THE NINE-MONTH PERIOD ENDING
SEPTEMBER 30, 2013	17
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF SEPTEMBER 30, 2013	18
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE NINE-MONTH PERIOD ENDING
SEPTEMBER 30, 2013	20
SUMMARY OF CHANGES IN EQUITY	21
SELECTED EXPLANATORY NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS OF
KLÖCKNER & CO SE FOR THE NINE-MONTH PERIOD ENDING SEPTEMBER 30, 2013	23

Income statement	Jan. 1 – Sep. 30, 2013	Jan. 1 – Sep. 30, 2012*)	Q3 2013	Q3 2012*)
	4,922		1,600
	904		296
	18.4		18.5
	108		36
	110		39
	30		10
	– 26		– 8
	– 31		– 11
	– 31		– 11
	– 0.31		– 0.11
	– 0.31		– 0.11
Cash flow statement/Cash flow	Jan. 1 – Sep. 30, 2013	Jan. 1 – Sep. 30, 2012*)	Q3 2013	Q3 2012*)
	– 2		44
	– 25		– 11
	– 27		33
Balance sheet	Sep. 30, 2013	Dec. 31, 2012*)	Sep. 30, 2012*)
	1,405		1,666
	462		596
	1,512		1,625
	3,712		4,331
Key figures	Jan. 1 – Sep. 30, 2013	Jan. 1 – Sep. 30, 2012	Q3 2013	Q3 2012
	4,953		1,617
	Sep. 30, 2013	Dec. 31, 2012	Sep. 30, 2013	Sep. 30, 2012
	9,776		9,776

Business performance in the first nine months of 2013

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• •
• •
• •
• •
• •
• •
• •
• •
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The increasingly effective cost reductions are particularly apparent when looking at the third quarter: The market-driven €5 million decline in gross profit was more than offset by the €14 million boost to EBITDA from the KCO 6.0 restructuring program. In total, as a result of that and additional operating expenditure savings, EBITDA doubled, from €18 million in the prior-year period to €36 million. Even without a €6 million contribution to earnings from the reversal of pension provisions, EBITDA before restructuring expenses, at €39 million, was within the guided range of €30 million to €40 million.

*) After Restructuring costs of €2m

^**) Incl. one-off gain of €6m due to release of pension provisions.

KCO 6.0: Restructuring program almost completed

As early as September 2011, we launched a comprehensive restructuring program (KCO 6.0) in light of the crisisinduced ongoing decline in European steel demand and the uncertain outlook, and have since expanded it several times. Besides cutting administration and sales overhead expenses, the measures focus on closing unprofitable branches and discontinuing business activities that are insufficiently profitable on a lasting basis.

Since its inception, the program has already led to the closure or, in Eastern Europe, the sale of 61 locations. The workforce has been reduced by more than 2,000. All in all, by the year-end, 71 locations (24%) are to be closed and some 2,200 jobs (19%) cut from the workforce.

The restructuring program already contributed an additional €43 million to EBITDA in the first nine months of 2013, thus largely offsetting the market-driven €69 million decline in gross profit.

We expect the restructuring program to make an incremental contribution to EBITDA of €65 million in fiscal year 2013. With additional €45 million the program is expected to make the full annual contribution to EBITDA of around €160 million for the first time in 2014.

Economic environment

Development of GDP in our core countries (in percent)	Q3 2013 vs Q3 2012
Europe	– 0.2
China	7.8
Americas

Automotive industry

Machinery and mechanical engineering

Construction industry

Results of operations, cash flows and financial position

(€ million)	Jan. 1 – Sep. 30, 2013	Jan. 1 – Sep. 30, 2012*)
	4,922
	904
	108
	2
	110
	– 27

(€ million)	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
	1,405
	462

Jan. 1 – Sep. 30, 2013	Jan. 1 – Sep. 30, 2012
4,953
4,922

(€ million)	Jan. 1 – Sep. 30, 2013	Jan. 1 – Sep. 30, 2012*)
	904
	108
	2
	110
	30
	– 26
	– 31

(€ million)	Jan. 1 – Sep. 30, 2013	Jan. 1 – Sep. 30, 2012*)	Q3 2013	Q3 2012*)
	68		26
	60		20
	– 18		– 7
Klöckner & Co Group	110	115	39	18

(€ million)	Sep. 30, 2013	Dec. 31, 2012*)
	1,039
	1,168
	843
	103
	559
Total assets	3,712	3,880
	1,512
	792
	382
	219
	606
	201
Total equity and liabilities	3,712	3,880

(€ million) Sep. 30, 2013 Sep. 30, 2012 Dec. 31, 2012 1,168 843 – 606 Net working capital 1,405 1,666 1,407

(€ million)	Sep. 30, 2013	Sep. 30, 2012*)	Dec. 31, 2012*)
	462
	31 %

(€ million)	Jan. 1 – Sep. 30, 2013	Jan. 1 – Sep. 30, 2012*)
	– 2
	– 25
Free cash flow	– 27	– 104
	– 21

Subsequent events

Macroeconomic outlook including key opportunities and risks

2013	2014
0.3	1.4
7.6	7.3

Automotive industry

Machinery and mechanical engineering

Construction industry

Current assessment of opportunities and risks

We are relatively optimistic about the Americas segment on account of developments in the USA, including the reindustrialization anticipated as a result of low energy costs. However, the fiscal and budget issues which have not yet been resolved for the long term could still have a dampening effect on the economy.

In summary, the Management Board is confident that the systems for managing risks and opportunities in the Klöckner & Co Group are working well. Sufficient allowance has been made and adequate provisions recognized including third-party guarantees - to cover all risks identifiable at the time of preparing the financial statements and required to be accounted for. Steps have been taken as necessary to cushion the impact of impending market risks. Given the current financing structure, no liquidity shortfalls are to be expected. There are no identifiable risks that raise doubt about the Company's ability to continue as a going concern.

Outlook

The trend in steel demand was once again unsatisfactory in the first nine months of 2013, primarily in Europe but also in the USA. This mainly reflected the ongoing construction industry crisis in large parts of Europe, fears in connection with a repeat of the European debt crisis, and investment restraint in response to the budget dispute in the USA. Despite the recently observed slight pickup in demand, both in the USA and in Europe, we continue to expect steel demand to decline in Europe by up to 5%, whereas we anticipate growth of up to 1% at best in the USA. In the years ahead, however, US steel demand ought to benefit tangibly from the general economic recovery, the shale gas boom and the resulting return of energy-intensive industries.

We expect the restructuring measures to have an increasing effect in the fourth quarter. Operating income (EBITDA) should therefore reach around €30 million before restructuring expenses in the final quarter of the year, despite the usual seasonal fall in demand in December. Accordingly, we confirm the forecast for full-year EBITDA before restructuring expenses of some €140 million. Net income will improve by more than €100 million, but will still be a high double digit negative amount.

Of the planned incremental €65 million contribution to EBITDA by the restructuring program for the current year, €43 million has already been achieved after nine months. For next year, we expect that once the program has been completed at the end of the year, it will make an effective contribution of an additional €45 million. Owing to the continued unsatisfactory earnings situation in Europe, we introduced further improvement measures in the reporting period as part of the KCO WIN program, to improve earnings in the short term. The action plan, which focuses on improving sales efficiency, is to contribute around €20 million to EBITDA in the next year alone. The program's full annual contribution to EBITDA of around €50 million will then be realized for the first time in 2015. The Group holding company will also once again be subjected to resizing as part of the program.

The majority of the expected restructuring expenses of around €25 million for the current year will be incurred in the final quarter. Despite this effect, we confirm our full-year target for 2013 of once again attaining a positive free cash flow with a corresponding further reduction in net financial debt.

Thanks to the completion of our restructuring measures as of year-end as well as the additional contribution to earnings from our improvement measures, we are able to generate a positive pretax result again next year from our own resources, i.e., even if the generally expected recovery of the steel markets fails to materialize. On this basis, we expect to be once again in a position to pay dividends.

Duisburg, November 6, 2013

Klöckner & Co SE

The Management Board

®

	Q3 2013	Jan. 1 – Sep. 30, 2013	Q3 2012
	99,750,000
	9.99
	997
	10.90
	8.16
	533,339

Ownership structure

At the time of preparation, our largest shareholders were, with a shareholding of between 5% and 10%, Interfer Holding GmbH, and with shareholdings of between 3% and 5% each, Franklin Templeton Investments Corp., Dimensional Holdings Inc./Dimensional Fund Advisors LP and Templeton Investment Counsel, LLC. At the present time, we have received no notification that any other shareholder has exceeded or fallen below the statutory notification thresholds. Based on Deutsche Börse AG's definition, the free float therefore stands at 92.2% due to the shares held by Interfer.

Capital market communications

Besides reporting to shareholders at the Annual General Meeting, the management and members of the IR team of Klöckner & Co SE provided interested capital market participants with information on the Group's results and strategy at eleven roadshows and 14 conferences in Germany and internationally, as well as during additional one-on-one discussions from the first through the third quarter of 2013. Discussions with investors focused primarily on the fullyear and quarterly results, the progress of the ongoing restructuring measures and the changes in the ownership structure.

In the first nine months, Klöckner & Co was covered by 31 banks and securities houses in over 120 research reports. As of the end of September, 14 of the securities houses rated Klöckner & Co shares a "buy". Twelve gave a "hold" recommendation and five rated Klöckner & Co shares a "sell".

Klöckner & Co also provides information on current Group developments at all times in the Investors section of the corporate website, www.kloeckner.com/en/investors.php. This includes information on our convertible bonds, financial reports, the financial calendar and corporate governance together with current data on share and convertible bond performance. Shareholders and other interested individuals can also sign up for our newsletter at ir@kloeckner.com.

The Investor Relations team looks forward to your questions and suggestions.

(€ thousand)	Jan. 1 – Sep. 30, 2013	Jan. 1 – Sep. 30, 2012*)	Q3 2013	Q3 2012*)
	4,922,357		1,599,890
	22,348		3,157
	3,154		2,847
	– 4,021,931		– 1,306,880
	– 426,243		– 133,768
	– 78,432		– 26,058
	-		-
	– 391,393		– 128,802
Operating result	29,860	– 15,608	10,386	– 9,310
Income from investments	-	125	-	-
	1,694		539
	– 57,867		– 19,075
Financial result	– 56,173	– 66,074	– 18,536	– 22,184
Income before taxes	– 26,313	– 81,557	– 8,150	– 31,494
	– 4,718		– 3,208
Net income	– 31,031	– 79,589	– 11,358	– 28,888
	30,758 –		– 11,350
	273 –		– 8
Earnings per share (€/share)
– basic	– 0.31	– 0.78	– 0.11	– 0.28
– diluted	– 0.31	– 0.78	– 0.11	– 0.28

(€ thousand)	Jan. 1 – Sep. 30, 2013	Jan. 1 – Sep. 30, 2012*)	Q3 2013	Q3 2012*)
Net income	– 31,031	– 79,589	– 11,358	– 28,888
	69,689		17,474
	– 14,830		– 1,923
Total	54,859	– 55,690	15,551	– 23,399
	– 15,486		– 7,285
	– 2,311		– 277
	4,619		1,154
	– 15		-
	– 977		– 202
Total	– 14,170	– 2,929	– 6,610	– 10,685
Other comprehensive income	40,689	– 58,619	8,941	– 34,084
Total comprehensive income	9,658	– 138,208	– 2,417	– 62,972
	11,117		– 1,933
	1,459 –		– 484

Assets

(€ thousand)	Sep. 30, 2013	Dec. 31, 2012*)	Jan. 1, 2012*)
Long–term assets
	414,809
	587,698
	10,486
	1,931
	11,268
	12,435
Total non–current assets	1,038,627	1,106,415	1,295,693
Current assets
	1,167,830
	842,531
	9,238
	90,389
	559,103
	4,176
Total current assets	2,673,267	2,773,171	3,411,293

Total assets	3,711,894	3,879,586	4,706,986

Equity and liabilities

(€ thousand)	Sep. 30, 2013	Dec. 31, 2012*)	Jan. 1, 2012*)
Equity
	249,375
	900,759
	321,550
	19,064
Equity attributable to shareholders of Klöckner & Co SE	1,490,748	1,479,631	1,735,804
	21,281
Total equity	1,512,029	1,502,371	1,764,149
Non–current liabilities and provisions
	238,060
	17,161
	791,612
	34,300
	93,159
Total non–current liabilities	1,174,292	1,382,919	1,605,475
Current liabilities
	126,608
	3,851
	219,237
	605,402
	70,475
	-
Total current liabilities	1,025,573	994,296	1,337,362
Total liabilities	2,199,865	2,377,215	2,942,837
Total equity and liabilities	3,711,894	3,879,586	4,706,986

(€ thousand)	Jan. 1 – Sep. 30, 2013	Jan. 1 – Sep. 30, 2012*)	3. Quartal 2013	3. Quartal 2012
	– 31,031		– 11,358
	4,718		3,208
	56,173		18,536
	78,432		26,058
	– 5,719		– 4,868
	– 1,270		– 181
	70,519		17,265
	– 65,536		111,790
	– 20,810		– 92,808
	– 27,601		– 11,498
	– 39,217		– 3,620
	2,681		468
	– 23,903		– 8,576
Cash flow from operating activities	– 2,564	– 85,624	44,416	– 165
	3,864		409
	6,705		-
	– 35,302		– 11,142
Cash flow from investing activities	– 24,733	– 17,640	– 10,733	– 10,429
	-		-
	– 21,312		– 44,282
Cash flow from financing activities	– 21,312	– 227,386	– 44,282	– 305,538
Changes in cash and cash equivalents	– 48,609	– 330,650	– 10,599	– 316,132
	– 2,503		– 642
	610,215		570,344
Cash and cash equivalents at the end of the reporting period as per statement of financial position	559,103	655,567	559,103	655,567

(€ thousand)	Subscribed capital of Klöckner & Co SE	Capital reserves of Klöckner & Co SE	Retained earnings
Balance as of January 1, 2012	249,375	900,759	568,803
Balance as of January 1, 2012 as restated for effects of IAS 19R	249,375	900,759	568,803
Other comprehensive income
Total comprehensive income
As of September 30, 2012	249,375	900,759	490,535
As of January 1, 2013	249,375	900,759	368,376
Other comprehensive income
Total comprehensive income
Balance as of September 30, 2013	249,375	900,759	321,550

Currency translation adjustment	Actuarial gains and losses (IAS 19)	Fair value adjust ments of financial instruments	Equity attributable to shareholders of Klöckner & Co SE	Non–controlling interests	Total
101,393		– 5,594	1,814,736	28,503	1,843,239
	– 78,932		– 78,932	– 158	– 79,090
101,393	– 78,932	– 5,594	1,735,804	28,345	1,764,149
					– 1,811
					– 3,187
					1,713
					– 66,488
					11,154
			– 57,325	– 1,294	– 58,619
					– 79,589
			– 135,593	– 2,615	– 138,208
					– 980
100,714	– 134,460	– 6,712	1,600,211	24,750	1,624,961
93,945	– 127,267	– 5,557	1,479,631	22,740	1,502,371
					– 15,486
					– 2,311
					4,619
					69,689
					– 15,807
					– 15
			41,875	– 1,186	40,689
					– 31,031
			11,117	– 1,459	9,658
79,667	– 56,377	– 4,226	1,490,748	21,281	1,512,029

Selected explanatory notes to the interim consolidated financial statements of Klöckner & Co SE for the nine-month period ending September 30, 2013

(1) Basis of presentation

The condensed interim consolidated financial statements of Klöckner&CoSE for the nine-month period ending September 30, 2013 were prepared for the interim presentation in accordance with Sec. 37x para. 3 WpHG in connection with Sec. 37w, para. 2 no. 1 and 2, para. 3 and para. 4 WpHG as well as International Financial Reporting Standards (IFRS) and the respective interpretations issued by the International Accounting Standards Board (IASB) as adopted for use within the EU.

The interim consolidated financial statements were not reviewed by an independent auditor.

Except for the changes discussed in note 2 below, the accounting policies applied to the interim financial statements as of September 30, 2013 are generally consistent with those used for the consolidated financial statements of Klöckner&CoSE as of December 31, 2012 under consideration of the IAS 34 regulations (Interim Financial Reporting). A detailed description of those policies is provided in the notes to the consolidated financial statements on pages 83 to 95 of the 2012 Annual Report. In contrast to the previous year, value changes in the underlying transactions in net investment hedges are offset against the changes in the value of the hedging instruments. The comparative figures were adjusted accordingly.

As part of the preparation of an interim consolidated financial statement in accordance with the IAS 34 for the period ending September 30, 2013, Klöckner&CoSE's management is required to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The actual amounts can differ from these estimates.

In the opinion of the Management Board, the interim consolidated financial statements reflect all adjustments deemed necessary to provide a true and fair view of the results. The results for the period ending September 30, 2013 are not necessarily indicative of future results.

The present interim consolidated financial statements for the nine-month period ending September 30, 2013 were authorized for issuance by the Management Board after discussion with the Audit Committee of the Supervisory Board on November 6, 2013. Unless otherwise indicated, all amounts are stated in million euros (€ million). Discrepancies to the unrounded figures may arise.

(2) New accounting standards and interpretations

In the fiscal year 2013, Klöckner & Co initially applied IAS 19 rev. 2011 (Employee Benefits) and IFRS 13 (Fair Value Measurement) as well as changes to IAS 1 (Presentation of Financial Statements).

IFRS 13 serves as a guideline for fair value measurement and thus replaces the regulations of various standards by one single standard. In addition, additional disclosures must be made. The standard does not have a significant impact on Klöckner & Co SE's consolidated financial statements.

IAS 1 requires separate subtotals for recycable and non-recycable items in the presentation of the statement of comprehensive income. These changes were applied accordingly.

(€ thousand)	As previously reported	Initial application of IAS 19R	As restated after inital application of IAS 19R
Balance as of January 1, 2012
			13,748
			69,440
			268,006
			155,470
Equity attributable to shareholders of Klöckner & Co SE	1,814,736	– 78,932	1,735,804
Total equity	1,843,239	– 79,090	1,764,149
Balance as of September 30, 2012
			13,425
			38,576
			333,840
			91,322
			1,600,211
			1,624,961
			– 479,928
			– 66,074
			1,968
Net income attributable to shareholders of Klöckner & Co SE	– 74,915	– 3,353	– 78,268
Net income	– 76,251	– 3,338	– 79,589
			– 0.78
			– 0.78
Balance as of December 31, 2012
			11,680
			14,824
			317,599
			74,568
			1,479,631
			1,502,371
			– 659,258
			– 79,783
			– 18,050
Net income attributable to shareholders of Klöckner & Co SE	– 194,876	– 5,133	– 200,009
Net income	– 197,579	– 5,113	– 202,692
			– 2.00
			– 2.00

Without the application of the revised standard the net loss for the first nine months in 2013 would have been lower by €3.4 million.

On March 29, 2013 and on May 21, 2013, respectively, the IASB published the changes to IAS 36 (Impairment of Assets) and interpretation IFRIC 21 (Levies), for which the EU endorsement is pending.

The changes to IAS 36 cancel disclosure requirements introduced with IFRS 13 relating to the fair values of cash generating units. IFRIC 21 governs recognition of levies, which are applied disproportionally within a year or if certain limits are exceeded, e.g. sales thresholds, and which are not covered by IAS 12 (Income Taxes). The changes of IAS 36 and IFRIC 21 must be applied to fiscal years beginning on or after January 1, 2014. Klöckner is currently evaluating the effects on the consolidated financial statements.

(3) Earnings per share

Earnings per share are calculated by dividing net income of the interim period attributable to shareholders by the weighted average number of shares outstanding during the period. In accordance with IAS 33.41, 13,364 thousand dilutive potential shares of the convertible bonds (2012: 18,447 thousand shares) were not included in the computation of diluted earnings per share as the quarterly result would be increased.

		Jan. 1 - Sep. 30, 2013	Jan. $1 -$ Sep. 30, 2012 *
Net income attributable to shareholders of Klöckner & Co SE	$(\epsilon$ thousand)	$-30,758$	$-78,268$
Weighted average number of shares	(thousands of shares)	99.750	99,750
Basic earnings per share	(€/share)	$-0.31$	$-0.78$
Diluted earnings per share	(€/share)	$-0.31$	$-0.78$

*) Comparative amounts for 2012 restated due to the first-time adoption of IAS 19 rev. 2011. Further information can be taken from note 2 to the financial statements

(4) Inventories

$\epsilon$ (€ million)	Sep. 30, 2013	Dec. 31, 2012
Cost	1.208.4	1,298.0
Valuation allowance (net realizable value)	$-40.6$	$-44.0$
Inventories	1,167.8	1,254.0

(€ million)	Sep. 30, 2013	Dec. 31, 2012
Non–current financial liabilities
	167.9
	229.1
	204.9
	189.0
	0.7
	791.6	913.7
Current financial liabilities
	102.5
	48.6
	66.6
	0.4
	1.1
	219.2	110.3
Financial liabilities as per consolidated balance sheet	1,010.8	1,024.0

(€ million)	Sep. 30, 2013	Dec. 31, 2012
Financial liabilities as per consolidated balance sheet	1,010.8	1,024.0
	10.6
Gross financial liabilities	1,021.4	1,032.9
	– 559.1
Net financial debt Klöckner & Co Group	462.3	421.9

	Europe		Americas		Headquarters/ Consolidation		Total
(€ million)	9M 2013	9M *) 2012	9M 2013	9M 2012*)	9M 2013	9M 2012*)	9M 2013	9M 2012*)
	3,083.7		1,838.6		-		4,922.3
	67.8 32.2		58.5 17.9		– 18.0 – 20.2		108.3 29.9
	856.6		544.3		4.0		1,404.9
	7,022		2,644		110		9,776

(€ million)	Jan. 1 – Sep. 30, 2013	Jan. 1 – Sep. 30, 2012*)
	29.9
	– 56.2
Income before taxes	– 26.3	– 81.6

March 6, 2014	Annual Financial Statement 2013 Conference call with journalists Conference call with analysts
May 8, 2014	Q1 interim report 2014 Conference call with journalists Conference call with analysts
May 23, 2014	Annual General Meeting 2014, Düsseldor
August 7, 2014	Q2 interim report 2014 Conference call with journalists Conference call with analysts
November 6, 2014	Q3 interim report 2014 Conference call with journalists Conference call with analysts

Klöckner & Co SE

Christian Pokropp

Disclaimer

This Report (particularly the "Forecast" section) contains forward-looking statements that are based on the current estimates of the Klöckner & Co SE management with respect to future developments. They are generally identified by the words "expect", "anticipate", "assume", "intend", "estimate", "target", "aim", "plan", "will", "endeavor", "outlook" and comparable expressions and include generally any information that relates to expectations or targets for economic conditions, sales or other performance measures.

Forward-looking statements are based on current plans, estimates and projections. You should consider them with caution. Such statements are subject to risks and uncertainties, most of which are difficult to predict and are generally beyond Klöckner& Co's control. Among the relevant factors are the impacts of important strategic and operating initiatives, including the acquisition or disposal of companies. If these or other risks or uncertainties materialize, or if the assumptions underlying any of the statements prove incorrect, Klöckner & Co's actual results may be materially different from those stated or implied by such statement

Without prejudice to existing legal obligations, Klöckner & CoSE does not assume any obligation to update forward-looking statements to take information or future events into account or otherwise. In addition to the figures prepared in line with IFRS or HGB (Handelsgesetzbuch - German Commercial Code), Klöckner & Co SE presents non-GAAP financial performance measures, e.g. EBITDA, EBIT, net working capital and net financial debt.

These non-GAAP measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with IFRS or HGB. Non-GAAP measures are not subject to IFRS or HGB or to other generally accepted accounting principles. Other companies may define these terms in different ways.

There may be rounding differences in the percentages and figures in this report.

This English version of the interim report is a courtesy translation of the original German version; in the event of variances, the German version shall prevail over the English translation.