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Semperit AG Holding

Quarterly Report May 10, 2011

760_rns_2011-05-10_16ffbd5c-b86b-4163-886e-bdde26e015f1.pdf

Quarterly Report

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Semperit AG Holding Report on the 1st Quarter 2011

HIGHLIGHTS

  • • Revenue increase of +27% to EUR 194 million
  • • Worsening of the raw material situation with respect to price and availability
  • • Increased pressure on margins
  • • Earnings after tax up +20% to EUR 11 million
  • • New production line for examination gloves put into operation in Surat Thani, Thailand
  • • Management change: Thomas Fahnemann assumes position of Chief Executive Officer replacing Rainer Zellner

Key Figures for the Semperit Group

1–3/2011 1–3/2010 Changes
2011/2010
in %
2010
Revenue in EUR million 193.7 152.4 +27.1 689.4
Earnings before interest, taxes, depreciation
and amortization (EBITDA)
in EUR million 25.3 23.8 +6.2 112.3
Earnings before interest and tax (EBIT) in EUR million 18.0 16.2 +11.3 82.3
EBITDA margin in % 13.1 15.6 –2.61) 16.3
EBIT margin in % 9.3 10.6 –1.31) 11.9
Earnings after tax in EUR million 11.2 9.3 +20.3 45.4
Earnings per share in EUR 0.54 0.45 +20.3 2.21
Balance sheet total in EUR million 605.5 567.7 +6.7 593.5
Capital and reserves in EUR million 355.2 333.6 +6.5 351.1
Equity ratio in % 58.7 58.8 –0.11) 59.2
Return on equity2) in % 12.6 11.2 +1.41) 12.9
Gross cash flow in EUR million 21.8 22.6 –3.7 91.0
Investments in tangible and intangible assets in EUR million 9.5 18.6 –49.0 60.0
Number of employees (at balance sheet date) 7,364 7,010 +5.0 7,019
Sempermed
Revenue in EUR million 86.2 73.3 +17.5 316.4
Operating profit (EBIT) = segment results in EUR million 8.1 10.0 –19.2 47.1
Semperflex
Revenue in EUR million 46.5 31.8 +46.1 145.5
Operating profit (EBIT) = segment results in EUR million 7.5 3.5 +115.5 24.2
Semperform
Revenue in EUR million 26.6 21.4 +24.3 109.4
Operating profit (EBIT) = segment results in EUR million 2.6 2.1 +24.1 15.9
Sempertrans
Revenue in EUR million 34.4 25.9 +33.0 118.1
Operating profit (EBIT) = segment results in EUR million 2.3 0.8 +195.9 0.0

1) Percentage points 2) Calculated on the basis of the full-year projection; 3.2% isolated for Q1 2011 (Q1 2010: 2.8%).

Content

Chief Executive's review 2
Group Management Report 3
Interim financial statements and notes to the interim financial statements 8
Statement of the legal representatives 13
The Semperit share 14
Financial calendar 15

Dear shareholders!

As the new Chief Executive Officer of the Semperit Group, I would like to take this opportunity to express my thanks to my predecessor, Rainer Zellner, for handing over an outstandingly managed

» Continue to accelerate profitable growth. «

company. Semperit boasts a solid capital base, strong market positions and a competitive cost structure, which will enable the company to successfully expand its business operations. I will do everything I can to promote the profitable growth of the Semperit Group in the upcoming years.

The first quarter of 2011 proceeded satisfactorily for the Semperit Group. Supported by a positive market environment, we succeeded in further increasing total revenue by +27% to EUR 194 million. However, a not insubstantial share of this revenue growth can be attributed to the significant

» Rigorous resource management. «

increases in the selling prices of almost all our products, which were made necessary by the massive rise in raw material costs. In addition to increasing raw material prices, we were also increasingly faced with the problem

of supply shortfalls in the past few months. On the basis of rigorous resource management, we succeeded in procuring the required materials on time and were thus able to avoid production interruptions.

Despite this greater burden on the cost side, we could improve earnings before interest and tax (EBIT) of the Semperit Group by +11% to EUR 18 million. Earnings after tax were improved by +20% up to EUR 11 million.

We assume that the strong demand for products manufactured by the Semperit Group will also continue in the months to come. In many busi-

» Full capacity utilization in many business areas. «

ness areas our production capacities are already fully booked until the summer. Against the backdrop of this environment, a key success factor will be the ability to effectively deal with the availability and

price volatilities of raw materials. In any case, we will take advantage of the positive economic environment to further press ahead with the growth of our company.

Thomas Fahnemann Chairman of the Management Board

Business environment

The upswing on the global economy continued at the beginning of the year 2011. In particular, the emerging markets in Asia provided important impetus for the expansion of the world economy. The U.S. economy grew unexpectedly strongly, driven by exports, investments and expenditures on durable consumer goods.

The economy did not develop uniformly in the European countries. Whereas the recession persisted in Ireland and several Southern European countries, the German economy flourished along with all those economies closely tied to Germany. The upturn in Austria was thus also quite vigorous.

In this environment, prices for natural and synthetic rubber rose strongly during the first three months of 2011. There was a downward price correction for natural rubber in February, but the overall increase over the entire first quarter was once again very significant.

Whereas a sufficient supply of natural rubber was available, the shortage of synthetic rubbers posed an additional problem along with the considerable price increases. World capacity for several types of synthetic rubber is currently too low. In the first quarter, the Semperit Group still succeeded in procuring sufficient quantities in order to process existing orders, but the struggle for available supplies is increasingly intensifying.

Carbon black, an important filling material used in the production of rubber mixtures, continued to be in short supply in the first quarter of 2011. The price of carbon black rose significantly as did the costs of chemical ingredients such as softeners and activators. Reinforcing materials such as steel wires and textiles were also subject to price hikes.

Financial performance

earnings after tax rose by +20% to EUR 11 million.

On basis of increased demand in almost all markets, total revenue of the Semperit Group climbed by +27% to EUR 194 million. In addition to the higher level of sales, the underlying reason was the large-scale selling price increases, in some cases in the double-digit range. Earnings before interest, tax, depreciation and amortization (EBITDA) amounted to EUR 25 million, a rise of +6% from the prior-year quarter. Despite considerably high raw material prices, this improvement was mainly related to higher sales volumes. The EBITDA margin was 13%, below the previous year's figure of 16%. EBIT rose by +11% from the first quarter of 2010 to EUR 18 million. However, the EBIT margin fell to 9%. In the first three months of 2011, the results attributable to redeemable non-controlling shares was slightly lower than the comparable figure in the previous year. For this reason, the financial results of minus EUR 3 million remained unchanged from the prior-year quarter. Accordingly, the Group revenue +27% EBIT +11% Earnings after tax up +20%

Expansion of global economy

Price increase for raw materials

Low capacity with synthetic rubber The increase in working capital tied up in trade receivables and inventories is due to the sales and revenue growth, as well as higher raw material costs. Investments in tangible and intangible fixed assets totaled EUR 10 million, below the EUR 19 million invested in the previous year, which also included the purchase of the machinery and equipment of the conveyor belt plant acquired in China. Cash and cash equivalents at the end of the first quarter of 2011 amounted to EUR 119 million.

Cash and cash equivalents: EUR 119 million

Performance of the divisions

The Semperit Group managed to report a gratifying business development especially in the industrial sector (Semperflex, Semperform, Sempertrans), whereas revenue growth in the medical sector (Sempermed) was due to selling price increases. The industrial sector achieved considerable volume growth in all divisions.

Considerable volume growth in the industrial business

Sempermed

Revenue of the Sempermed division increased by +18% to EUR 86 million during the first quarter of 2011. Most of the revenue growth can be attributed to the significant increases in selling prices

necessitated by massive raw material price hikes. EBIT amounted to EUR 8 million, a decline of 19% below the outstanding figure for the prior-year quarter. Margins came under pressure due to the rising costs of materials.

Sales of surgical gloves developed in a stable manner during the period under review. The considerably larger business segment for examination gloves only showed a small volume growth in the first quarter of 2011. Demand in Europe continued to grow dynamically, whereas business in the USA declined slightly. Nevertheless, revenue with examination gloves in all regions still considerably surpassed the prior-year figures as a consequence of the implemented selling price increases.

Once again, the production lines at the Hatyai site were converted in the first quarter of 2011 to enable the manufacturing of nitrile gloves as a consequence of the particularly high price of latex. In particular, demand for nitrile products on the part of hospitals is increasing for price reasons. At the same time, the first production line was put into operation at the new examination glove facility in Surat Thani.

Semperflex

The Semperflex division once again expanded during the reporting period. Against the backdrop of a positive market environment, the order situation developed very satisfactorily in the first quarter of 2011. Revenue rose by +46% to EUR 47 million. Although the prices had to be hiked significantly as a result of rising raw material costs, product margins continued to decline. However, by exploiting economies of scale Semperflex succeeded in improving EBIT to EUR 7 million (previous year: EUR 3 million).

Semperflex was particularly impacted by the lack of availability of some types of synthetic rubber during the first quarter of 2011. In several cases the division had to resort to using more expensive materials due to supply shortfalls.

The hydraulic hose segment benefitted from increased demand in all markets. Business was par-

ticularly good in the USA, where Semperflex could improve its market position. In addition to rising demand on all markets, the delivery share gains achieved by Semperflex mainly in 2009 and 2010 helped push up the volume of incoming orders.

The good demand development also continued for industrial hoses and in all product groups. With the exception of Southern Europe, all markets developed positively for Semperflex Industrial. Germany, Scandinavia and Russia showed themselves to be quite dynamic, with demand once again fully picking up steam.

Lower sales rise for examination gloves

Continued growth

Trend towards nitrile gloves

Considerable revenue increase

Burden of raw material supply shortfall

Perceptible growth in demand for hydraulic hoses

Good order situation for industrial hoses

All production facilities were operating at full capacity due to the good level of demand. In the first quarter of 2011 additional capacities created in the Czech Republic and China considerably raised total output. Furthermore, the decision was made to further expand capacity at the manufacturing facilities located in Thailand and China.

The volume of incoming orders for elastomer sheeting remained good in the first quarter of 2011. Output could be increased compared to the previous year as the result of efficiency enhancement measures. However, due to its high material share, the earnings of the elastomer sheeting segment were more seriously impacted by the raw material price hikes than any other segment of the Semperflex division. Accordingly, it suffered considerable margin losses despite selling price increases passed on to customers. Strong cost burden on elastomer sheeting

Semperform

The Semperform division reported a considerable rise in revenue of +24% to EUR 27 million in the first quarter of 2011. Business developed satisfactorily in all segments, though at different growth rates. Similar to the situation with industrial hoses, the business development was not only negatively affected by rising raw material costs but also by supply shortfalls. However, the significant growth in sales helped push up EBIT by +24% to EUR 3 million.

The seal profile segment for windows and doors continued to enjoy good demand in the first quarter of 2011. Sales and revenue rose significantly both in Germany as well as in the Eastern European countries.

The railway superstructure segment succeeded in winning numerous new orders during the reporting period. Not only did the business in France proceed more favourably than in the previous year,

but the Austrian and German markets also achieved major increases.

The handrail segment profited from increased demand for spare parts in all markets in the first quarter of 2011. However, business in the OEM (Original Equipment Manufacturer) segment in the Asian growth market stagnated at the prior-year level due to tough competition and increasing price pressure.

Following a rather weak period for business in 2010, the order situation for cable car rings was very good during the reporting period. Sales of ski membranes also developed extremely positively thanks to the significant upswing in the ski industry.

The pipe construction business continued to develop very gratifyingly, whereas demand for filter membranes remained constant at a moderate level, similar to the situation prevailing in 2010. The sponge rubber segment profited from the recovery of the construction industry in the period under review.

Revenue and earnings improvement

Higher output

Good order situation for window and door seal profiles

Gains achieved by the railway superstructure segment

Handrails: Focus on spare parts

Highly dynamic growth for cable car rings and ski membranes

Solid development

Sempertrans

The conveyor belt division Sempertrans succeeded in increasing its revenues by +33% to EUR 34 million in the first three months of 2011 on the basis of a good order volume at the end of 2010. However, incoming orders fell somewhat in the first quarter of 2011. EBIT improved from the prior-year level of EUR 1 million to EUR 2 million during the reporting period.

In particular, the order volume for standard textile conveyor belts developed negatively in all markets. The situation was aggravated by competitive pressure in a highly competitive environment featuring rapidly rising raw material prices.

earnings improvement

Revenue and

Decline in order intake for textile conveyor belts

Positive trend for metal conveyor belts

In contrast, the order situation for high quality metal conveyor belts was more favourable. Mining sector demand for conveyor belts rose in Eastern Europe and South America. Business was stable in Western Europe, where the main customers are busy in the cement and steel industries and are operators of quarries.

Outlook

In our opinion, the upswing of the global economy will continue, even if the price increases for raw material and energy along with the more restrictive approach to economic policy on the part of the industrialized nations and emerging markets end up having a dampening effect. In any case, the current economic situation should ensure the high capacity utilization of all production companies.

High capacity utilization at all production sites

Pressure on margins

Against this backdrop, the further development of raw material markets poses a big risk to the business development of the company. From today's perspective, the situation on raw material markets is expected to deteriorate further, in terms of both price levels and availability. The ability to fully pass on raw material price hikes to customers in a timely manner seems to be limited. For this reason, margins are likely to come under even more pressure in the upcoming quarterly periods. In this environment, Semperit will do everything in its power to further improve its productivity and cost structure in order to be able to also generate satisfactory results in the entire year 2011.

Consolidated balance sheet

Assets

in TEUR 31.3.2011 31.12.2010
Non-current assets
Intangible assets 5,752 6,031
Tangible assets 195,044 199,843
Financial assets 12,352 13,397
Investments in associated companies 560 560
Other receivables and assets 608 767
214,315 220,599
Deferred Taxes 11,394 10,761
Current assets
Inventories 130,543 113,704
Trade receivables 105,401 85,531
Other receivables and assets 24,522 23,695
Cash and cash equivalents 119,372 139,186
379,838 362,116
Assets 605,547 593,476

Equity and liabilities

in TEUR 31.3.2011 31.12.2010
Capital and reserves
Share capital 21,359 21,359
Captial reserves 21,503 21,503
Revenue reserves 299,706 288,613
Currency translation adjustments 12,675 19,590
355,244 351,065
Non-current provisions and liabilities
Liabilities from redeemable non-controlling shares 81,381 83,405
Provisions for pension and severance payments 41,647 41,998
Other provisions 19,014 18,924
Liabilities to banks 5,639 5,974
Other liabilities 896 972
148,578 151,274
Deferred taxes 3,846 4,206
Current provisions and liabilities
Tax provisions 8,843 5,710
Other provisions 26,191 24,848
Trade payables 42,354 40,969
Other liabilities 20,491 15,404
97,879 86,931
Equity and liabilities 605,547 593,476

Consolidated income statement

in TEUR 1.1.–31.3.2011 1.1.–31.3.2010
Revenue 193,664 152,399
Changes in inventories 7,325 8,738
Own work capitalised 216 223
Operating revenue 201,205 161,360
Other operating income 5,413 4,842
Material costs –123,206 –90,561
Personnel expenses –28,998 –26,055
Other operating expenses –29,125 –25,765
Earnings before interest, taxes, depreciation and amortization (EBITD
A)
25,290 23,822
Depreciation and amortisation of tangible and intangible assets –7,272 –7,633
Earnings before interest and tax (EBIT
)
18,019 16,189
Interest and other income from financial investments 370 531
Expenses on financial assets –3 –12
Interest and other financial assets –51 –69
Profit/loss attributable to redeemable non-controlling shares –3,634 –3,740
Financial results –3,318 –3,290
Earnings before tax (EBT) 14,700 12,900
Income taxes –3,493 –3,584
Earnings after tax 11,207 9,316
Earnings per share (undiluted) 0.54 0.45
Avarage number of outstanding shares 20,573,434 20,573,434

Consolidated statement of comprehensive income pursuant to IFRS

in TEUR 1.1.–31.3.2011 1.1.–31.3.2010
Earnings after tax 11,207 9,316
Other comprehensive income
"Available for sale" financial assets –152 98
thereof deferred taxes 38 –25
Currency translation differences of the period –6,928 13,649
Reclassification in the net profit 14 0
–7,028 13,722
Total recognised comprehensive income 4,179 23,038

Consolidated cash flow statement

in TEUR 1.1.–31.3.2011 1.1.–31.3.2010
Earnings after tax 11,207 9,316
Depreciation/write-ups of tangible and intangible assets 7,272 7,591
Profit and loss from asset disposal –134 1,183
Changes in non-current provisions –261 782
Other non-cash expense/income 41 –25
Profit/loss attributable to redeemable non-controlling shares 3,634 3,740
Gross cash flow 21,760 22,587
Increase/decrease in inventories –16,838 –16,898
Increase/decrease in trade receivables –19,871 –15,372
Increase/decrease in other receivables and assets and deferred taxes –1,301 –4,183
Increase/decrease in trade payables 1,385 5,124
Increase/decrease in other liablilities and current provisions
and deferred taxes
9,128 1,481
Changes in working capital resulting from currency translation adjustments –2,952 1,498
Cash flow from operating activities –8,689 –5,763
Proceeds from sale of tangible and intangible assets 921 54
Proceeds from sale of current and non-current financial assets 2,000 0
Investments in tangible and intangible assets –9,503 –10,532
Investments in current and non-current financial assets –1,110 –2,170
Net cash outflow on acquisition of businesses 0 –1,840
Cash flow from investing activities –7,692 –14,489
Dividends to non-controlling shareholders of subsidiaries 0 –11,013
Cash flow from financing activities 0 –11,013
Net increase/-decrease in cash and cash equivalents –16,381 –31,265
Effects resulting from currency translation –3,434 9,916
Cash and cash equivalents at the beginning of the period 139,186 185,756
Cash and cash equivalents at the end of the period 119,372 164,407

Consolidated statement of changes in equity

in TEUR Share
capital
Capital
reserves
Revenue
reserves
Revaluation
reserves
Currency
translation
Total
Balance at 31.12.2009 21,359 21,503 267,085 –182 793 310,558
Total recognised
comprehensive income
0 0 9,316 74 13,649 23,038
Balance at 31.03.2010 21,359 21,503 276,401 –109 14,441 333,596
Balance at 31.12.2010 21,359 21,503 288,811 –198 19,590 351,065
Total recognised
comprehensive income
0 0 11,207 –114 –6,914 4,179
Balance at 31.03.2011 21,359 21,503 300,019 –312 12,675 355,244

Notes to the interim financial statements

Accounting and valuation methods

These interim financial statements as at March 31, 2011 have been prepared in keeping with the principles set forth by the International Financial Reporting Standards (IFRS) as contained in IAS 34, Interim Financial Reporting. There have been no major changes made in the accounting and valuation methods applied by the Semperit Group. For more detailed information on the accounting and valuation methods applied, readers are referred to the consolidated annual financial statements for the year ending December 31, 2010, which are the basis for these interim statements.

This interim report of the Semperit Group has neither been audited nor subject to an auditor's review.

Associated companies (equity method)

The net book value of Isotron Deutschland GmbH on March 31, 2011 amounted to TEUR 560 (December 31, 2010: TEUR 560).

Purchase and sale of tangible and intangible fixed assets

In the first three months of 2011, the Semperit Group purchased tangible and intangible fixed assets amounting to TEUR 9,503 (previous year: TEUR 18,619). In contrast, tangible and intangible fixed assets with a net book value of TEUR 785 (previous year: TEUR 144) were disposed of.

Dividend

On April 21, 2011 a dividend of EUR 1.25 per share was paid.

Year Number
of shares
Total
dividend
in TEUR
Dividend
per share
in TEUR
2011 20,573,434 25,717 1.25
2010 20,573,434 23,659 1.15

Contingent liabilities

There were no material changes in respect to contingent liabilities since the last balance sheet date.

Transactions with related parties and individuals

Balances and transactions between Semperit AG Holding and its subsidiaries are eliminated within the context of consolidation and are not further described here.

B&C Semperit Holding GmbH is the direct majority shareholder of Semperit Aktiengesellschaft Holding and B&C Privatstiftung is the dominant legal entity. B&C Industrieholding GmbH is the shareholder holding an indirect majority stake. It prepares and publishes consolidated financial statements, in which the Semperit Group is included in consolidation. B&C Privatstiftung and all its subsidiaries are considered as related parties or individuals of the Smperit Group pursuant to IAS 24.

Related parties and individuals of the Semperit Group include the members of the Management and Supervisory Boards of Semperit Aktiengesellschaft Holding, the managing directors and Supervisory Board members of all companies which directly or indirectly own a majority stake in Semperit Aktiengesellschaft Holding, and finally the members of the Management Board of B&C Privatstiftung and the close relatives of these Management and Supervisory Board members and managing directors.

The following fully-consolidated companies – Semperflex Asia Corp. Ltd., Semperform Pacific Corp. Ltd., Siam Sempermed Corp. Ltd., Shanghai Semperit Rubber & Plastic Products Co. Ltd., Shanghai Sempermed Gloves Co. Ltd. and Semperflex Shanghai Ltd. - undertake business transactions with the non-controlling co-partner of these subsidiaries Sri Trang Agro Plc under established market conditions. Sempertrans Best (Shandong) Belting Co. Ltd. undertakes business transactions with the joint venture partner Wang Chao Coal & Electricity Group, the noncontrolling co-partner of these subsidiaries, under established market conditions. Furthermore, insignificant business transactions were carried out with related parties and individuals at prevailing market rates.

Significant events after the balance sheet date

The longstanding Chief Executive Officer Rainer Zellner vacated his position on the Management Board at the end of the 122nd Annual General Meeting, on April 14, 2011. Thomas Fahnemann was named to serve as the new CEO and Chairman of the Management Board. At the same time, Johannes Schmidt-Schultes was appointed to be the new Chief Financial Officer of Semperit AG Holding effective April 15, 2011.

Patrick F. Prügger was elected to serve on the Supervisory Board of Semperit AG Holding for a period of three years to succeed Walter Lederer, whose Supervisory Board mandate expired with the end of the Annual General Meeting. Veit Sorger and Michael Junghans were re-elected to the positions of Chairman and Deputy Chairman of the Supervisory Board respectively.

Statement of the legal representatives

We confirm to the best of our knowledge that the consolidated interim financial statements prepared in accordance with the International Financial Reporting Standards (IFRS) give a true and fair view of the assets, liabilities, financial position and profit or loss of the Semperit Group, and that the first quarter Group Management Report gives a true and fair view of the assets, liabilities, financial position and profit or loss with respect to the important events that have occurred during the first three months of the financial year and their impact on the consolidated interim financial statements, of the principal risks and uncertainties for the remaining nine months of the financial year, and of the major related party transactions disclosed.

Vienna, May 5, 2011

The Management Board

Thomas Fahnemann Chairman

Johannes Schmidt-Schultes

Richard Ehrenfeldner Richard Stralz

The Semperit share

key Data
International Securities Identification Number (ISIN) AT0000785555
Share price low 1st Quarter 2011 in EUR 35.27
Share price high 1st Quarter 2011 in EUR 41.05
Share price at March 31, 2011 in EUR 41.05
Market capitalization at March 31, 2011 in EUR million 844.4
Earnings per share 1st Quarter 2011 in EUR 0.54

Financial calendar

Half-year financial report 2011 August 9, 2011
Report on the 1st–3rd Quarter 2011 November 15, 2011

imprint

Media proprietor: Semperit Aktiengesellschaft Holding, Modecenterstrasse 22, A-1030 Vienna Design, typesetting and lithography: be.public Werbung Finanzkommunikation GmbH, Vienna

We have prepared this Report on the 1st Quarter and verified the information contained in it with the greatest possible care. In spite of this, rounding, typesetting and printing errors cannot be ruled out. Rounding of differences in the totalling of rounded amounts and percentages may arise from the automatic processing of data.

The forecasts, plans and forward-looking statements contained in this report are based on the knowledge and information available and the assessments made at the time that this report was prepared. As is true of all forward-looking statements, these statements are subject to risk and uncertainties. As a result, the actual events may deviate significantly from these expectations. No liability whatsoever is assumed for the accuracy of projections or for the achievement of planned targets or for any other forward-looking statements.

Statements referring to people are valid for both men and women. This interim report was prepared in German and English. In case of doubt, the German version shall take precedence.

contact

Sybille Richter Investor Relations Tel: +43 1 79 777-210 Fax: +43 1 79 777-602 E-Mail: [email protected]

www.semperit.at

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