Good morning, and welcome to the SGS First Half 2026 Results Call. I'm here with Geraldine Picaud, our CEO; and Marta Vlatchkova, our CFO.

Please note that this call is being recorded and will be available for a replay on the SGS website. I would now like to turn the conference over to Geraldine Picaud, CEO of SGS.

Thank you, Ariel. Good morning, ladies and gentlemen.

Thank you for attending our H1 results presentation, and it's a pleasure to have the opportunity to share with you our highlights. As usual, I will give some colors about the business, and then Marta will provide more details about the financial performance.

Over the half year, we have continued the execution of our strategic pillars. You may remember from our Q1 sales update call at the beginning of 2026 was marked by strong investment in Digital Trust, in particular, with the acquisition of Granite River Laboratories as well as expanding our connectivity offering through new capabilities developed in the U.K.

We also continue to invest in AI to optimize our processes and develop new offerings. We will show more on this topic at our Capital Markets event in November.

Our Sustainability offering of IMPACT NOW has remained a strong growth driver. In regards to the portfolio, ATS, Applied Technical Services delivered a strong performance, and you will see that we have progressed in the implementation of the cost synergies.

On the sales side, we just launched exciting offers to our clients, combining ATS and SGS North America expertise. We have continued targeted bolt-on acquisitions, and completed the disposal of the consulting business, Maine Pointe, which is consistent with what we announced in April.

Now about the financial performance, we are very happy with the results. Organic growth reached 5.6% and would have been above 6% without the crisis in the Middle East.

Our EBIT or adjusted operating income, free cash flow and earnings per share continued to deliver strong improvement, and Marta will further comment on this. So despite the uncertainty ongoing in the Middle East, I strongly believe that we will reach our guidance for this year.

Now a quick focus on Digital Trust and Sustainability. The 38% growth in Digital Trust reflects the excellent trend of our organic business.

We generated 18% organic growth, mainly driven by wireless connected devices. Also the recent investments in bolt-on we have realized translates into a scope effect of 29%.

Granite River Laboratories is recording double-digit growth in several countries. On Sustainability, IMPACT NOW is also delivering strong results with 18% total growth, out of which 10% is organic.

The 4 pillars of IMPACT NOW have recorded high growth, especially the nature pillar where environmental testing is reported. Now let's move on to ATS, which is part of our group since the beginning of the year.

In terms of governance, we have implemented a management structure where ATS remains as a stand-alone entity with an SGS top management and a dedicated Board, this way, ATS expertise, brand and business are fully preserved, while synergies can be efficiently implemented. And in H1, we have already realized cost savings in procurement, in real estate, and started to consolidate the leadership positions.

About cross-selling, we have launched an offering dedicated to data centers, where we provide an end-to-end solution based on complementary knowledge of SGS and ATS. Marketing campaign is live these days.

You might see it on the social networks. It's a first initiative, which will bring business in H2, and we expect more to come before year-end.

In Q2, we have continued an active bolt-on program. Since our Q1 update call, we have completed 5 more acquisitions.

Keystone and CMIC bring bioanalytical capabilities in the U.S. K Prime is an environmental testing laboratory also in the U.S.

and TechCorp completes our offering in electrical systems in Australia. Finally, we expand SGS Digicomply with Agroknow, a one-of-a-kind food risk intelligence platform creating FoodNexus, the most comprehensive digital solution for the food and beverage industry.

So please let me warmly welcome the experts and the employees of these companies, who joined the SGS family. Let me now share some key highlights from our business lines, and let's start with Industries & Environment.

The business delivered a solid H1 with organic growth of 4.7% and total growth of 16.2%, including the consolidation of ATS. Environment delivered strong results led by our environmental testing and field services in the Americas and in Europe.

We see continued momentum in North America, which delivered double-digit organic growth in the first half. Inspection & Supervision and Safety delivered mid-single-digit organic growth, fueled by major industrial projects in Latin America and Asia Pacific where investment in infrastructure and in the energy transition continues.

This was partially offset by disruptions linked to the situation in the Middle East. Solid growth in industrial testing was supported by contract wins in Europe, increased demand for oil condition monitoring services and strong double-digit growth in Latin America.

Scope of 17.6% was driven by continued strong performance of acquisitions with high contribution from ATS in North America. Natural Resources now.

Our business line delivered a strong H1 with 5.5% organic growth, led by Minerals and a significant improvement in adjusted operating income margin to 14.4% of sales. Minerals delivered high single-digit organic growth, supported by all regions with double-digit growth in Asia Pacific.

Within Minerals, geochemistry recorded double-digit growth with strong results also in metallurgy and consulting, led by gold and critical minerals. In this area, we continue to pioneer and scale advanced geochemistry solutions, including PhotonAssay, which compared to traditional fire assay delivers results in minutes with around 4x lower CO2 emissions and no hazardous lead waste.

This is how we help mining clients meet their operational and sustainability goals. In agriculture, performance is improving, driven by increased activity in field and laboratory testing across all regions.

Oil, Gas & Chemicals posted moderate organic growth despite business disruptions in the Middle East. Connectivity & Products delivered another excellent performance with 6.8% organic growth and an improved adjusted operating income margin of 22.7%.

Connectivity delivered high single-digit organic growth led by wireless in Asia Pacific and project wins in North America. The demand for technology, security and compliance continues to increase as connectivity expands across devices, platforms and networks.

Softline grew double digit with strong momentum in PFAS testing, driven by increasing consumer awareness and new regulations. And this demand is really structural.

We see, for instance, after the French ban in January, an EU REACH restriction that will apply at European level from October covering clothing, footwear and food contact materials. Hardlines also posted high single-digit organic growth with continued strong demand for home appliances and food contract material testing.

And finally, in Trade Facilitation Services, continued strong demand for e-platform services was offset by softer trade flows in Europe. Now let's turn to Health & Nutrition.

Following a clear acceleration in the second quarter, the business delivered 4.5% organic growth and an improved adjusted operating income margin of 12.7%. Food delivered high single-digit organic growth, led by Asia Pacific and Europe, we see increased demand for food contaminants and safety testing driven by consumer expectations as well as new food labeling requirements, in particular, in Asia.

Food safety remains a core area of focus for SGS with our globally recognized expertise, we help clients respond quickly to new contaminant risks and regulatory requirements. Pharma posted moderate organic growth driven by drug development and partly offset by project delays in clinical research in Europe.

In Cosmetics & Personal Care, we saw a marked improvement in the second quarter following the delayed start of client projects. And finally, let's move to Business Assurance, which delivered an excellent first half of the year with 7.3% organic growth and an improved adjusted operating income margin of 18.9% led by certification, Digital Trust and Sustainability.

Certification confirmed its strong momentum with high single-digit growth led by medical service -- medical devices and food. These are critical, fast-growing sectors where certification protects, product integrity, safety and market access and where we continue to invest.

Digital Trust delivered double-digit organic growth, fueled by strong demand for information security, cybersecurity and AI assurance. The need for cyber resilience continues to accelerate, and the regulatory momentum on AI is building globally.

In Sustainability, double-digit organic growth was driven by greenhouse gas emissions, verification, together with strong demand in forestry and circularity certification. Here, we support our clients in meeting increasing regulatory requirements such as the carbon border adjustment mechanism or CBAM where importers into Europe now need verified carbon emissions data.

The scope contribution was mainly driven by the consolidation of the forensic business of ATS and by our bolt-on acquisitions in Digital Trust and Sustainability, partially offset by the disposal of our U.S. consulting business.

And with that, I now hand over to Marta, who will present our H1 financial performance.

Thank you, Geraldine, and a very good morning to everyone. Let me start with the main financial KPIs of this record first half.

Sales reached CHF 3.7 billion, thanks to the strong organic growth of 5.6% and this despite the Middle East situation. The adjusted operating income continued to grow over-proportionally to reach 15.1% margin on sales, up by 20 basis points.

This translated into an excellent free cash flow of CHF 260 million up by 25%, excluding the proceeds from last year's disposals of our Geneva headquarters. Moving to the sales bridge where you can see the amazing 13.4% growth in constant currency, comprising of 5.6% organic growth and 7.8% from M&A, including ATS.

On ForEx, the Swiss franc remained strong, resulting into a negative translation impact of minus 5.8%, which reduced the growth to 7.6% in Swiss francs. Here, we see how the growth in Swiss francs translates into euro and U.S.

dollar. The franc has remained structurally strong and this despite a slight appreciation of the dollar and the euro in the second quarter of this year.

This is why the 7.6% sales growth in Swiss francs translates to 10.3% growth in euro and plus 18% in U.S. dollars.

Moving to the sales per region. In Testing & Inspection in Asia Pacific, the organic growth accelerated to close to 10% in H1 and boosted by double-digit growth in Health & Nutrition and Natural Resources, together with high single-digit growth in Connectivity & Products and Industries & Environment.

Europe grew organically by 2.3%, led by high single-digit growth in Food and new projects in Industries & Environment. This was partly offset by phasing of clinical testing activities in Pharma and overall soft volumes in Natural Resources and Connectivity & Products.

In North America, the soft first quarter was followed by double-digit growth in Q2, led by Industries & Environment and Health & Nutrition and with that, helping to close the first half at 6.1% organic growth. Eastern Europe, Middle East and Africa declined by 2.8%, impacted by the Middle East situation.

Latin America expanded by 9% organically, supported by very strong activity in Industries & Environment and Minerals Testing. And finally, as commented earlier by Geraldine, Business Assurance delivered 7.3% organic growth led by Digital Trust and Sustainability.

Now on the adjusted operating income. I'm proud to report the over-proportional growth in margin, which reached 15.1% on sales, up by 20 basis points and this despite Middle East situation and the ForEx headwinds.

The adjusted operating income grew organically by CHF 39 million, equivalent to 30 basis points of margin improvement. It benefited from the efficiency plan savings and the operating leverage, partially offset by the impact of the Middle East situation and investments in AI capabilities.

M&A, including ATS, added CHF 42 million, contributing 10 basis points of margin progression. Lastly, the negative ForEx impact of CHF 35 million equivalent to 20 basis points, was driven as commented earlier by the strong Swiss franc.

Moving now to the full P&L. As previously outlined, in the first half, the sales grew by 7.6%, and the adjusted operating income expanded over-proportionally by 9% or 20% -- 20 basis points on margin improvement.

Below the adjusted operating profit, we can see the increase in amortization of intangible assets which is driven by ATS. Restructuring costs were broadly in line with prior year as we took action to reduce our cost base in response to the Middle East situation.

In other nonrecurring items and transaction costs, the variation is due to the gain on disposal of our former headquarters building in H1 2025. Below the operating income, the financial expenses have increased with the financing of the ATS acquisition, while the effective tax rate is improving by 1 percentage point.

We all that the EPS reached CHF 1.58, an increase by 14.5% when we strip out the gain on the HQ disposal from the baseline. And finally, the record performance of the first half translated into a record free cash flow of CHF 260 million, up by 25% compared to prior year before the proceeds from the HQ disposal.

And with that, I hand over to you, Geraldine.

Thank you, Marta. So let's go to the outlook and to conclude, the business is very well on track, and we have demonstrated that we are able to offset impact of external events like the Middle East, for instance, Therefore, we fully confirm our guidance.

With this, I'm going to open to Q&A now.

Our first question comes from Rory McKenzie from UBS.

It's Rory here. I guess my 1 question would be about the margins and specifically the margin impact of scope changes.

I think from your slides, the kind of the average margin contribution from M&A was about 15.8% through H1. But obviously that there's been some big single deals kind of within that.

So firstly, can you just talk about ATS, I think that was originally planned to bring in about $95 million of EBITDA this year. Is that still the right number to think about?

And what was the margin impact of that within Industries & Environment. And then secondly, within Business Assurance, can you just talk about the margin impact of the disposal of Maine Pointe within this year?

Any other contributions of M&A in that division?

Thank you, Rory. I'm going to comment a bit and then give -- ask Marta to go into more detail.

Look, as far as ATS is concerned, we're very happy on both the sales and the margins. And as we are developing more and more the synergies on the cost -- on the selling side and on the cost side, as explained, we are effectively reinforcing and getting more points of margins.

But we really, as per plan. So we're very happy about it.

I would say, overall to the group, it is neutral and to I&E probably slightly accretive. In I&E, you've got a lot of things.

You've got Middle East impact, you've got a lot of elements to analyze. Marta, do you want to go a bit specifically on the margin -- on the scope effect of the -- on the margin, which is positive, Rory, overall, you see it in the bridge is it's accretive to our margins.

Yes, I confirm we are well on track. Just to clarify that the $98 million you were referring to Rory.

This is the EBITDA and not the adjusting operating income. But yes, indeed well on track.

Then there was a question on the margin in Industries & Environment. The impact here is I would say, the strongest impact from the Middle East situation, which is really visible here in the margin.

Again, ATS is not -- it has impact here in terms of scope. But in terms of margin, it is well slightly above our average industry and environment margin.

And with regard to your question on Business Assurance.

Business Assurance, really, we completed the disposal of Maine Pointe. The overall impact on group accounts is not material.

You have here indeed as well the impact of ATS. This is the forensic business, which is -- the margin is slightly above the margin of our traditional BA business.

I hope that answers, Rory.

The next question comes from Will Kirkness from Bernstein.

I just wanted to ask on the balance sheet, how much acquisitions have impacted the unbilled sales and WIP number. It's moved up a bit, but I appreciate when you have like a full impact on the balance sheet, but not anywhere else, it can distort things.

And then sort of following up because I expect ATS will be in that answer. I just wanted to double check how you treat the growth within ATS, whether you put that in the acquired with the base or whether you put it in organic?

Okay. Well, I will let Marta answer on the balance sheet.

ATS is just on the scope. It's a scope effect.

Fully, it's been closed in January. So for 1 year, you will have it fully on the scope because we didn't have it last year.

So as a result, it's fully shown on the scope. It's not impacting our organic growth at all will be in a year time.

That's how we do, obviously, as soon as we have a comparable. Marta, do you want to take the balance sheet question?

Yes. So Will, on unbilled revenue, we have actually 3 impacts.

One is -- the first 1 is obviously ATS plus all the other bolt-on acquisitions. You have seen the strong growth driven by those acquisitions.

So this is increasing compared to December. Second, I was commenting on ForEx, which when we look in the profit and loss in sales in adjusted operating income, is a headwind.

However, when we look in the balance sheet and you compare June 2026 with December 2025. Actually, we have the dollar, the Chinese yuan who have appreciated against the Swiss franc.

So this brings I would say, mechanical increase in the underlying value. And then third part is also if you look in past years, historically, between in the first half, there is an increase in unbilled revenue, which is driven by our contracts built over time.

So this is seasonal. Yes.

So in a nutshell, those 3 impacts that have to be considered when looking at our balance sheet.

The next question comes from Annelies Vermeulen from Morgan Stanley.

Two questions. So firstly, on restructuring expenses.

I think when we last spoke, you were guiding to CHF 20 million to CHF 40 million for 2026. But I think that was before the conflict in the Middle East.

So what are your expectations now for restructuring charges for this year? And within that, could you talk about the cost adjustments you're making in the Middle East and how -- and the time frame of that?

And then secondly, just on North America, as you said, a significant growth -- organic growth acceleration in Q2, you mentioned I&E and H&N as drivers of that. So could you expand on that a little bit?

Was that acceleration in end market activity, new contract wins, pricing? Some more detail there would be great.

Thank you Annelies. Thank you for the questions.

On the restructuring, look, we have effectively you're totally right in an impact of the Middle East. I would just say quickly, and I will give -- talk to Marta to specify what are we thinking in terms of numbers for the year and what was the impact of Middle East restructuring for H1.

But look, when we have a fixed cost business, you need to adjust the cost when you have less revenue. So that's simple as this.

Marta, would you like to comment on the restructuring charges, and I would take the -- I would take the mic again on North America.

So the first half, we have CHF 18 million restructuring cost. If we look for the full year, we would see that around CHF 30 million.

So compared to the initial guidance, CHF 20 million to CHF 40 million, we remain within that.

Right. Thank you, Marta.

So restructuring costs well controlled even if we have to adjust and address the Middle East crisis. Look, on North America, we are seeing a lot of positive momentum.

You mentioned it. We see that in our Industries & Environment, we have a lot of demand when it comes to nondestructive testing.

We have a lot of demand for a lot of our services in the energy sector. We see also strong demand when it comes to aerospace defense sector, and a lot of project wins actually that we are having here in Industries & Environment.

So you've got everything obviously around environmental testing which is literally booming. So we have a strong double-digit growth, and that's accelerating in Q2, and we see good momentum for the rest of the year in I&E.

When it comes to H&N, and on food, we have a double-digit growth. We don't see that slowing down at all.

We have a lot in our pipeline. And on Pharma, we really have a lot of nice opportunities.

We are having a lot of new wins that will translate into revenues as we go into H2, and this is fueled by all the reshoring efforts and the manufacturing, which is building out in North America as far as pharma is concerned. Money is starting to pick up in all analytical testing in pharma, and we are on it -- we're on it, and we strongly believe the trend line is up and we are on it, and we are going to take full advantage of this market opportunities.

I don't know if it was just my line, but Marta, I didn't hear any of your answer. I think the line cut out.

Could you just repeat it, please?

Okay. So Marta, what was the impact of Middle East on the restructuring for H1?

The impact of Middle East is around CHF 8 million to the Middle East.

So you have an CHF 8 million that was not positive. That's for H1.

And I think Marta said that we should not be above CHF 30 million for the year. That's about the...

We remain with the initial guidance, CHF 20 million to CHF 40 million, yes, which should give an average of CHF 30 million, say, to expect.

The next question comes from Victoria Chang from JPMorgan.

I just have 1 on the exit rate. out of 2Q and how you see growth progressing from here into the second half as well as margins?

And then maybe just 1 follow-up on your Natural Resources growth which actually accelerated in 2Q despite the Middle East conflicts. So what's driving the acceleration here?

Is that the minerals growth in the agriculture really continuing to be strong? Or is the Oil & Gas and Chemicals business actually still holding up quite well despite the disruption.

Right. Thank you, Victoria.

So you're right, we have nice exit rates as we go out of Q2 in terms of organic growth, growth and margins, and we'll do all we can to maintain this as we go throughout the year, but I think we want to stick to our guidance today. And of course, as at the year unfolds, we will give you more precise perspective on organic growth and obviously on margins.

With regards to Natural Resources, it's composed of 3 elements. We have, as you mentioned it, oil, gas, chemicals, minerals and agriculture, and you're totally right, our Minerals activity is very strong.

We really enjoyed a high single-digit growth in Minerals. Agriculture was softer, and I would say Oil & Gas and Chemicals as well because there is an impact here, as you rightly said on the Middle East.

But overall, we have Natural Resources segment, that is at 5.5%, 6.9% in Q2 versus 4.2% in Q1. So overall, strong momentum, and we don't see that changing as we enter Q3.

The next question comes from Virginia Montorsi from Bank of America.

Just a quick follow-up on the organic growth. Could you help us understand a little bit more on the organic growth in Europe, given it's the only geography we haven't touched yet on some of the softness you've discussed.

And then just as a follow-up on LatAm. Can you help us understand how much of the organic growth is factoring in the hyperinflation effects from countries like Argentina?

And how should we think about that?

Okay, Virginia. Thank you for your question.

So look, the organic growth, you have it really described in the deck by end market and by geography. And you can see that apart from Middle East for the reasons we know.

But again, Middle east is overall not more than 2% of our total sales. I want to remind everybody of that.

Every -- all regions, all geographies and all of our business lines supported organic growth. Obviously, you have to position your services to the megatrends.

This is what we do. This is why we have built Digital Trust offering, the IMPACT NOW offering, which is Sustainability and energy transition in one hand.

And everything around digital because this is areas where our services are growing double digits. And we'll continue to do that.

You see all the bolt-ons we are doing along the years are bolt-ons that are accretive to our organic growth and our margin. So we will continue to drive value through our organic growth.

You have more technical question on LatAm. With Argentina, would you like to answer that one, please Marta?

Yes. So on Argentina, as you can see also in the definition of our organic growth, we are capping the hyperinflation.

And so it's not something which is inflating our growth. So in the 9%, you see it is -- you should not see it as diluted by hyperinflation.

And I think you were asking specifically a bit more for Europe. As I commented, I wanted to say -- repeat on food, we see very high single-digit growth, strong in Europe.

There are new projects in Industries & Environment, strong growth. However, we have phasing in our clinical testing activities in Pharma and the volumes in Natural Resources remains soft, same very soft Connectivity & Products.

And Virginia, to come back to LatAm and your question, Argentina is a small country in LatAm, say, around 10% right of the sale of the region.

So our biggest business is Chile for now.

Thank you, Virginia. I hope that answers your questions.

The next question comes from Suhasini Varanasi from Goldman Sachs.

Just a couple of small ones left for me, please. Health & Nutrition, you did see some client project start-up in cosmetics and personal care.

Just wanted to check if that was something that would continue to benefit growth in the second half of the year? The second question is on the cost synergies that you've achieved on ATS so far this year, is it possible to quantify the impact that you've seen already in first half and what you're expecting for the full year?

Thank you, Suhasini. So yes, on cosmetics, we see a second half that's going to be higher than the first half because we see projects wins when it comes to clinical testing.

And so all good with cosmetics and the momentum we're seeing, again, growth trends as we are entering in the second half. On cost synergies, regarding ATS, we are fully on plan.

You remember that we said we would have CHF 30 million of synergies. That would be half cost half coming from the cross-selling.

You see the initiatives and cross-selling. I mentioned the data center in my comments.

On the cost, it's also fully on track. So you will get at least CHF 5 million for this year, if not more.

as we are talking about cost synergies for ATS and SGS North America.

The next question comes from Neil Tyler from Rothschild & Redburn.

A couple, please. Firstly, M&A more broadly.

You obviously completed a lot of deals on -- as well as ATS in the first half. So I wonder, Geraldine, perhaps if you could share your thoughts on the sort of evolution of the portfolio to date and whether you expect the recent pace of bolt-ons to continue?

And also maybe a few comments beyond ATS on the sort of pace of integration of the acquired businesses into the wider group? And then secondly, on Business Assurance, just you could help me understand the sort of relative growth contribution of the different components because from the comments, it looks like 2 of them, 3 segments called out are growing at double digit.

The other is growing at high single digit, and the division is growing at 7.3%. So I'm just kind of trying to square those numbers in my head and just understand the different dynamics.

Sure. Okay, Neil, thank you for the questions.

Maybe we'll start with the Business Assurance one, your last one. Look, the growth drivers of our Business Assurance line is truly what we described, which are digital trust, food medical device.

But we have the core management system or what we call the QHSE, which is the ISO certification. This is the historical business.

This is growing, I would say, low to mid-single digits. In the mature market, that represents about 1/4 of the total revenues of Business Assurance.

And we have also some impact from automotive. You know that automotive is still impacting, especially Europe, and that's, if you will, that kind of offset of the double-digit growth that you see in other lines or other segments of Business Assurance division.

So that explained the math, as you say. If we go to M&A, we will continue on bolt-ons, absolutely.

That's clear. This is a growth part of the growth engine.

We're creating a lot of value for our shareholders with this. We are very strict as you remember, if you were in our previous capital market event where we explained how we are making sure we have a growth and value creation engine with our bolt-ons.

So that is going to continue. We've described the way we integrate ATS, on the bolt-ons, we are also a systematic approach, but not a dogmatic one.

So we're making sure that when we effectively add new capabilities, and expertise to the group, we can scale it up and leverage it across the regions by obviously keeping the expertise. So there's not one size fits all in integration.

It depends on the acquisition, if it's a testing lab, environmental testing lab or it is cyber capabilities, that's not going to be the same way to integrate the business into the SGS family. I hope that answers your question.

The next question comes from Remo Rosenau from Helvetische Bank.

Now the net debt has gone up considerably to CHF 3.9 billion. However, the gross financial expenses only increased from CHF 43 million to CHF 53 million.

Looking forward, should we expect some increase in the financial expenses with some kind of delayed effect here. It seems like a very moderate increase in financial expenses.

Yes. Marta?

Yes, Remo, I confirm that what you see in H1, you should not expect something significantly higher in H2. So indeed, we were able to -- of course, we have the EUR 1 billion bond we issued last year.

So we have the interest expense on that to finance ATS. But we have also optimized how we manage our cash plus we are generating stronger free cash flow.

So this helps.

So we should not expect, kind of...

We should not expect a significant increase compared to the trend you see now in H1 2026.

Great. And my follow-up question would be -- these CHF 3.9 billion should, of course, decrease somewhat to the end of the year with an increased free cash flow in the second half despite some additional bolt-ons of course.

However, I mean, what is the kind of net debt to EBITDA figure you would say is the upper end of what you would think, is reasonable given your acquisition strategy?

Yes. So indeed, we have the phasing in our free cash flow generation, even though it's very strong in H1, H2 is higher.

We have also the phasing of the dividend cash out, which is coming in H1. All in all, I would say, in terms of debt leverage, we should be at around 2.2x on adjusted EBITDA at the end of December.

And you will see effectively a decline on this -- on the leverage as we go towards the year end, Remo. So all good.

I know that. I mean, that technically that is obvious, but given your acquisition strategy and that you did not exclude another larger deal, what I wanted to get at is which kind of net debt to EBITDA level is kind of your upper ceiling within your strategy?

Look, we always want to be around 1.7 like last year, that's our sweet spot and we'll get there. But we don't want to miss growth opportunities on the way -- and -- but our goal is to have a strong balance sheet.

That's clear for us.

Okay. So on a sustainable base, you would not like to go above 2x?

No, we prefer to be below that, yes. Yes.

The next question comes from Francois Digard from Kepler-Cheuvreux.

That's a very simple one. On free cash flow.

So could you help us understand the seasonality of free cash flow on the EBITDA to free cash flow conversion rates? Should the H1-H2 phasing in '26 be considered representative of what we should expect in future years?

Okay. Marta, do you want to take it without any dramatic change on the business, obviously.

Yes. Basically, this is the seasonality, which you can see also from past years although it is improving because we try to drive a bit more balance between H1 and H2.

But yes, roughly of 1/3 towards 2/3 between H1 and H2 in terms of generation of free cash flow. This is the seasonality.

The next question comes from James Rowland Clark from Barclays.

Just 1 question from me, please. It's a very broad one.

So you flagged that you're seeing sort of better trends in pharma. You think it's a pickup in activity in clinical testing.

You've also mentioned that agriculture is seeing improved performance. But you've also got sort of slightly softer trade flows in Europe, mentioned in sort of Connectivity & Products.

Is there anywhere else in the business you're seeing a material change in either direction in activity at a sort of market level or specific to you beyond your obviously flagged Digital Trust and Sustainability?

Yes. Thank you, [ Francois ].

We -- look, we are always focusing on where growth and double-digit growth is coming from. And we see, as you mentioned, Digital Trust and IMPACT NOW as key.

We see sectors such as aerospace and defense also very strong, everything around energy transitions, data centers. And this is where we are providing a lot of services and we develop offering in order to answer the fast-growing sectors.

So on data centers we're promoting the entire cycle concept, design verification, geotechnical, fire construction, environmental assessment and so on and so forth and all around the construction monitoring, the commissioning services. So everywhere where we have some industry pickup, we are here to capture that growth either organically or with ATS, always on bolt-on.

The last question comes from Arthur Truslove from Citi.

So first one, there seems to be some sort of private equity-driven portfolio management going on in the testing and inspection space involving both of your peers. Do you think that operating on a diversified basis as you do enables you to maximize shareholder value at this moment in time?

And is there anything that you're likely to do to sort of demonstrate perhaps some hidden value within the group. And then second question, it looks like excluding the impact of the war, you might have grown pretty close to 7% in the second quarter.

Is that right? And can you talk about the impact of contract pruning on both organic growth and margin in the first half and how that should impact things in H2?

Thank you, Arthur. We will start with the second question, and I will let Marta answer on the impact of the Middle East for Q2 -- Q2 organic growth.

And maybe you can give also for H1 Marta. So on the contract pruning, we always do that.

And I would say the impact is much lower for the H1, probably around 0.1, 0.2 percentage points on the organic growth.

Yes, in Q2, the impact of Middle East is roughly 80 basis points. So indeed, it will be not 7% underlying growth, but close to.

And for the H1, what would be the impact?

So the H1 is around 60 basis points.

So above 6%, if we -- should we had not this impact. On your question around private equity, I think that shows the sector has got a lot of -- is attractive and very attractive.

And the debate about being specialized or being diversified. I can see -- it's a debate that is ongoing.

But you know what, we have a lot of business lines where we are very strong. There are some others that we might consider to effectively divest and unlock some value.

That's part of the portfolio that we're doing, where we're doing our reviews geographically and from a business line standpoint. But listen again, we have a lot of business lines where we are very strong and at scale, consumer products, environmental testing, business assurance you name it and so on.

So I do think, Arthur, that a blended portfolio really reduce earnings volatility, as I explained already, which is part of why we are posting continuous organic growth in line with our guidance and steady margin improvement. We are not a generalist.

We are deep specialists in more than 1 or 2 businesses. But in several businesses, but that reduces the risk that any single, I don't know, regulatory or shock or contract that would end or cycle or any downturns defines your results.

That's why we're so resilient. So again, this is a strength of SGS.

Thank you, Arthur. So with this, I would like, again, to say that our first half results demonstrate Strategy 27 is fully successful.

And at SGS we turn promises into tangible performance, and we will continue to deliver. Thank you for being with us this morning.

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