Aug 29, 2019
Operator
Good day, and welcome to the Eurofins Scientific H1 2019 Results Conference Call. Today's conference is being recorded.
At this time, I would like to turn the conference over to Dr. Gilles Martin, Chief Executive Officer.
Please go ahead, sir.
Gilles Martin
Hello, everybody, and thank you for joining us for our offshore results conference call. So I'm happy to report on robust first half results.
Our markets are well orientated. We have seen, and we continue to see, very good growth in Bio Pharma, food testing, our environmental testing business is doing very well, also TestAmerica in North America.
So things are well orientated. On the report on the cyber attack, unfortunately, as you are aware, we were attacked by criminals that forced us to shut down our systems early June and to spend a lot of time to screen all those systems and restart and reinstall.
And that has unfortunately caused a significant hindrance to doing business in the month of June, which has impacted our results. I am happy to report that after all this work, our labs have restarted, and we can now put this behind us.
It's very disruptive. Of course, we have invested more we'll do even more to protect the security of our systems.
Many other companies are attacked, have been attacked, will be attacked, it's an ongoing fight. And of course, we are committed to do what it takes to avoid these types of problems in the future.
We could fortunately, on the financial side, catch up some of the lost work in the second half of June since our labs restarted and most of our labs had restarted on the 17 of June. So the damage is not as bad as what it could have been in the financial way.
We also should get a good response from our insurance. This will take time to be determined.
On the other aspect, the M&A is in line with our objectives. We intend to add about EUR 200 million revenues from acquisitions this year.
This is the normal pace that we had indicated at the beginning of a five-year program 2015-2020. Also on startups, you see we are on a slower pace of startups and we are not stopping completely.
We are making very good progress on opening our new – expanding our new campuses. We have new expanded campuses in Lancaster, in Hamburg and Vienna.
We also built new big labs in Shanghai and Saverne. So we are doing quite well towards this program, so we believe we will be done by the end of 2020 as we plan.
The last lab to come online from this program is the one we are building to house the Covance Food Testing business. In Medicine, it might move into the first quarter of 2021 as it looks like now.
So overall, pretty good. Our organic growth is good, and it was even stronger in July.
So the outlook for the rest of the year is good. And I will now let Laurent Lebras talk about – give a little bit more flavor on our financial results and then we'll switch to Q&A.
Laurent Lebras
Thank you. Good afternoon, everybody.
So indeed, we are very happy to report solid results despite the cyber attack. As you have seen, I mean we estimate the impact of the cyber attack to be around €60 on the revenue and around €50 million on the EBITDA.
We believe the bulk of the impact is recorded in the June financials. And of course, we believe the net impact after reimbursement from insurance to be lower than this figure.
On EBITDA, I mean we have a solid growth of plus-29% year-on-year at €371 million. Of course, the EBITDA is impacted by to effect the IFRS 16 impact, which is a positive of €62 million and the cyber impact, which we estimate as a negative of €50 million.
If you try to calculate the like-for-like basis, the EBITDA margin was in a slight decrease of 40 basis points, which is mostly due to both on how difficulties and a bit of dilution from TestAmerica compensating for improvement in other areas of the business. We have a reduced spend on CapEx at €121 million and as well as on M&A at €150 million in line with our objective.
And we have a strong free cash flow generation in the first half, at plus 60%, including IFRS 16 and was stable compared to last year as we exclude IFRS 16, which is quite remarkable despite the cyber attacks. Overall, our net debt has increased mostly due to the IFRS 16 impact and our leverage is at 3.5, including IFRS 16, which is also in line with our set towards the mid.
And to conclude we have an adjusted EPS, which is stable at €8.83. So overall, solid results from organic growth, EBITDA and cash generation despite the cyber attacks.
So now, we can move to Q&A if you have any questions for us.
Operator
Thank you. [Operator Instructions] All your line open please go ahead.
Will Kirkness
Sorry, it's Will from Jefferies, I was on mute. Just got three questions if that's okay, and the first one just on CapEx.
The run rate looks to be below €300 million so just wondering whether there was any timing or seasonality there, whether you might come in a little bit below the original guidance? The second one was just on the current portion of the debt.
So it's moved up from €391 million at the end of last year to €882 million. There was obviously going to be a portion of IFRS 16 so I was wondering if you could let us know how much of that is IFRS 16.
And then is the balance just the sort of RCS facility that can be rolled over? And the final question is just around the first half revenue growth.
If you could give us maybe the FX impact on the contribution from M&A that would be quite useful. Thanks very much.
Gilles Martin
We are not sure on the CapEx. Some of the CapEx, especially in buildings, is very hard to time.
So we're staying towards an objective of around €300 million. Also the IFRS 16 has an impact on the CapEx so it's a little bit also modified by this.
On the other two questions, I believe we need to look it up. We have provided in the presentation on Slide 78 the detailed balance sheet with the column isolating the IFRS 16 impact so I think you can find the amount there because we see the impact of IFRS 16 on each line of the balance sheet.
Will Kirkness
Okay, thanks very much.
Gilles Martin
And for the FX, I mean we didn't calculate at the end of June because it's uncomparable. The FX impact that we made was marginal.
I mean, we didn't disclose it but there is a bit of FX impact indeed from the depreciation of the dollar.
Will Kirkness
Okay. I mean, I appreciate for the half it’s not comparable because of the cyber attack but you must know your contribution in M&A and you must know the FX impact for the half.
Is that something you're just not willing to give us?
Laurent Lebras
I mean the contribution from the M&A, I mean we have disclosed this in the financial note I mean – but we don't really disclose the main figure because they are not standard if you want. I mean we disclose on a fuller reporting period.
I mean we have made calculations of course but we didn't disclose them so far.
Will Kirkness
Okay, thanks very much.
Operator
Thank you. And we'll take our next question.
Your line is open, please go ahead.
Suhasini Varanasi
Hi, it’s Suhasini from Goldman Sachs. Just one question please.
If you think about the SDIs of €44 million, is it possible to give a breakdown between the costs relating to the cyber attack, the lab start up costs and the other restructuring expenses please?
Gilles Martin
Do we have that?
Laurent Lebras
Yes we have it, like we said, I mean, at the end of June, we have almost no costs related to the cyber attack booked in the P&L. So we just have the drop of revenue and the drop of profit, which is related to this.
But we have very little SDIs which are related to this. And then the fleet of the SDI, I mean, between [indiscernible] from the restructuring.
Let me see. I mean, I just need a minute to get back to you and we'll give you the…
Gilles Martin
Okay, let's take the next question and come back to this one.
Operator
Okay, let’s take our next question. Caller your line is open please go ahead.
Allen Wells
Good afternoon Gilles and Laurent. Allen Wells here from Exane BNP.
Just may be following-up on Will's question from the start. Looking at the balance sheet, obviously, quite a step up in the short-term borrowings and just looking at that €880 million versus the €300 million of cash on the balance sheet, could you maybe just talk a little bit about your strategy in terms of your ability to finance and refinance these commitments over the next 12 months?
I mean it's the biggest – at least the biggest step up that I remember between short-term liabilities to short-term cash. That's the first question, please.
And then the second question, just looking at the FY2019 outlook, I know you've not said a great deal on – in the statement but specifically looking at the €350 million of free cash flow target, is the right way for us to think about that if we assume worst-case as a €50 million cash hit from cyber profit, albeit slightly to be less than that given the insurance, the free cash flow and your net shouldn't be any worse than €300 million. And I guess the reason why I ask is that the €49 million inflow ex-IFRS 16 feels like an awful lot to do in the second half to get to that number or the other factors we need to be aware of that.
Thank you.
Laurent Lebras
Yes. On the later point, we have a strong seasonality in our business.
We've always had it. I think last year, our free cash flow was 25% in the first half if I believe, annual free cash flow.
I mean we added that to some contribution from – or some hit from the cyber attack, you'll find it. On one point, it wasn't ours; it is our objectives for the year.
We haven't changed our objectives. The question is of course will be what part of the cash can we recover that was missed in June and how this will be booked.
But if we recover, what we believe would be right, all of the lost margin there is no reason for us to change our objectives. Our organic growth is in line with our objectives and our business is doing well.
On the short term when looking at the details, what you have to know is our bank lines are maybe booked there but they are five-year terms. So they are actually long commitments.
So that's just as an aside. And we are committed to flexibilize our cash yields so that we don't have to carry so much cash on our balance sheet on an ongoing basis as we did in the past, which caused us to pay interest for things we don't use.
And that's why we will use on an ongoing basis some of those bank facilities.
Allen Wells
Okay. Thank you.
Operator
Thank you. And we'll move on to our next question.
Caller your line is open. Please go ahead.
Unidentified Analyst
Yes. Good morning, I’ve got three questions if I may.
The first is on the intangible assets your operating leverage of the malware impact and see it was all just the gross profit loss on the sales – or the revenue loss or if there were some extra items to deal with the crisis during June. And also there were few issues saw some clients that didn't come back after the restoration of the operation.
That would be the first question. Second question is on the tax.
Your tax on the P&L seems much closer than the tax paid on the cash flow. Just wondering if you could give us an idea of your guidance for tax this year, when this gap will eventually narrow?
,
Gilles Martin
Yes. So as Laurent mentioned, the – we didn't have so many direct impact in additional costs in June.
The order of €1 million or €2 million or something like that in our SDIs, that's not the major impact. We will have some ongoing costs or remediation but they are not like huge.
Then we haven't seen issues with clients not coming back. Obviously, this is not pleasing for any client and our teams are really bent over backwards to try to continue to work on the most – in a more manual way wherever it was possible.
Some clients with very urgent work that could not be delayed during that period, then I've sent it somewhere else. And others maybe have delayed some work, some work will never be done.
We don't really know. We haven't heard of clients saying okay, we won't work with you anymore because of that or not in a material way.
Anyway, clients come and go for some of our business. On the tax aspect, I think it's very hard to read out honestly speaking, there are a lot of onetime effects.
So we don't provide that type guidance and we do hope that we will have a bit narrower gap between the tax paid and the tax booked by the end of the year. And to come back on the question from one person before in terms of SDI out of the €44 million, I mean basically, €23 million is linked to start-up scopes and €5 million from restructuring scopes and €50 million from integrations and reorganization.
Operator
Thank you. [Operator Instructions] We will take our next question.
Your line is open. Please go ahead.
Unidentified Analyst
I've got a few questions please. Can I just clarify one point that Allen made earlier.
It sounded like you said that you booked the short-term debt in current liabilities and then said that those are sort of five-year facilities, I'm not sure why would they be booked into current liabilities rather than not current liabilities, sorry dwell on the point. But secondly, on the hybrid which you have said in the past that you will pay off and come the step up dates in January.
Is that still the intention to do that, please? And finally, you – I think in part, the reason for the results being delayed slightly was for the change of auditor, and I just wonder why the last half year report, there was an auditor statement at the back of the report.
And this half year, that doesn't seem to be one.
Gilles Martin
Thank you. Laurent, do you want to answer the short-term question or are you still looking into it?
Laurent Lebras
No, still looking into it. But I can answer the last part of the question on the auditor.
I mean the audit works have been completed with lawyers and the opinion is under quality review, which is a normal process and should be issued probably in the next two days.
Gilles Martin
On the hybrid, we – it's expensive to not reimburse in hybrid and why we cannot make any commitment on that legally because that would be freelance to whoever has audited that paper. I don't see why they wouldn't reimburse the hybrid in January, if will make more sense if possible.
So on the detail of short-term debt, Laurent will come back later. It doesn't change so much actually.
If I look at, it was last year. So we can take the next question.
Operator
Thank you. And we are going to take our next question.
Caller, your line is now open. Please go ahead.
Murielle André
Yes, good morning. I am Murielle André with HSBC.
I have two questions, first regarding CapEx. I'm a bit surprised to see the statement of €36 million between CapEx, including IFRS 16 and CapEx before IFRS 16, and I would love to understand what it refers to, the €36 million?
And my second question is regarding SDI. What we have to expect as SDI level for the full year at this stage, please.
Laurent Lebras
Yes. So I guess on the IFRS 16 is when you rent new buildings, you have to account for the – for whatever the commitment is in the lease as CapEx and that is probably what happened in the first half.
And for the full year, we still have quite a bit of going on and moving into our new campuses, our startups are ramping up. We still have more startups.
Also, Boston Heart is in this category of start up and is losing a lot of money so that is an impact. The comparable gets better in Q4 for Boston Heart, which we still suffer in Q3 from that company.
The – is getting much smaller, and in next year, it will be much more negligible. I realize actually that I missed one question earlier on the clinical diagnostics.
So I'm starting to answer this one. Boston Heart is continuing to not do well.
And as I mentioned, we think it will be pretty negligible in our total Group by the end of the year. So that's one thing.
The other thing is on our European clinical diagnostics, the business is not changing very much. It is profitable, generating good cash flow, not growing very fast for the routine part.
We are starting to see some traction on the noninvasive clinical testing. We've got very good growth.
I think we're at 10% or 20% organic growth on that segment where we are probably the largest player in Europe on this type of advanced testing in volume. And our new technologies on that, we're making good progress to get the fee marking on the new test, that we have that is much more cost-effective for 2021 [ph] than whatever else is on the market.
We'll make an announcement when we get it but this is becoming – looking better and better, and that could have a big potential also outside of Europe in markets where maybe not every insurer can pay €200 million or €250 million for NGS test. In the U.S., outside of Boston Heart, our clinical testing business is doing well, actually quite well, especially our business around transplant patient where we are the market leader and there, we have a very good pipeline of tests.
And I think at least one is getting very close to being reimbursed. And if that reimbursement is good, this could be a huge run for our business in terms of growth and our used benefits for patients because this is a test that can detect sub-acute rejection before there is any other sign of rejection of kidney – a transplanted kidney and so we can say that biopsies of patients and this is something where medical benefit is great.
We're very happy to cooperate with the scientists who developed it. And then we have another series of tests that are in our pipeline that we can launch right after that which will add other benefit.
Also around birth, we've got a good range of tests. And so, I think if I look at 2020 for specialized clinical diagnostic, we have nice things in the pipeline.
Laurent Lebras
On the short-term borrowings, to come back on the question, which was asked previously, it's mostly due to drawing of FTS lines with a short maturity. This is why it's falling under the short-term borrowings, but most of the lines like Gilles said have a five-year maturity and on a permanent renewal though this is not something, which would…
Gilles Martin
All right. So, I guess, we answered all those good questions.
Is there anything – are there more questions now?
Operator
Thank you. [Operator Instructions] We currently have no questions in the queue.
[Operator Instructions] We do have another question. Caller your line is open.
Please go ahead.
Unidentified Analyst
[Indiscernible] Just a big quick question because you mentioned as per the cyber attack that maybe some work have been delayed or postponed by July and some cannot be concerned. During the good organic growth by July, would you be able to maybe split the impact of the work that have been postponed from June to July just to try to see what has been by July the normalized organic growth I guess?
Gilles Martin
Thank you. I think not so much has moved to July.
It's pretty marginal because the labs that have stocked, they have pretty filled down their stock in the second half of June, a little bit will be in July or maybe August, but this is not meaningful. In July, we still had one lab, one large lab, which was not working.
This was our forensic business in the UK, which was still in endurance and it has restarted at the end of July. So, yes, I don't think there will be – normally should not be so much ongoing impact after June, which way and whatever.
Unidentified Analyst
Thank you.
Operator
Thank you. And we have another question.
Caller your line is open. Please go ahead.
Unidentified Analyst
Hi, good afternoon. [Indiscernible] So, I just have a question on the declared organic growth in the January to May period of 4.5%.
Is that comparable to the 3.6% in Q1? Or the 4.9% in Q1 trading day adjusted?
Gilles Martin
I think there was no – pretty much no trading day impact from the period to May. So there is no significant adjustment on that.
Unidentified Analyst
Okay. So I should really think of that as being a slightly slower growth in the April to May period compared to the 4.9% in the January to March?
Gilles Martin
Because there was a correction for Boston Heart also in January to March, which I don't have in front of me, I think I have to look at the press release for March. The main message is in the year-to-date May, we’re at 4.5% and that's before the impact of Boston Heart, which is almost 1%.
So if you extract Boston Heart from this period, you have something that is above or 5% objective for the year.
Unidentified Analyst
Thank you very much.
Laurent Lebras
In Q1, we mentioned that the organic growth, excluding our Boston Heart, was 5.7%. So we're somewhere near at the end of May.
Unidentified Analyst
Okay, got it. Okay, thank you very much.
Operator
Thank you. [Operator Instructions] And it appears we have no further questions.
My apologies, we do have one more question. Caller your line is open.
Please go ahead.
Unidentified Analyst
Hello, [indiscernible]. I've got a question concerning your debt mix and do you intend to change that?
And the second thing is do you intend to get your rating as now you've got a bunch of securities in the market?
Gilles Martin
Hello. Yes, I mean, long term we already indicated that we are thinking to getting a rating and maybe 2021 is maybe a time or somewhere – anywhere between 2020 and 2022 is the point where we should get a rating.
First, we want to deliver it a bit. This is something we have put in the press release.
We haven't talked about here. We pretty much have all the laboratories that we needed.
So we have the right footprint, we don't need to do a very large acquisitions anymore. We have the right mix of product.
As you see now, the things we looked at were more like technologies rather than big laboratories. Although, we added some labs in environment in UK and Spain where we’re very not strong, we’re not present there in a meaningful way.
So the M&A will be lower for the next few years than it has been in 2017 and in 2018. Our CapEx also should start to be much less by 2021 because we have built our labs, we have built our network.
We still have start-ups, but €300 million is a lot of room to build labs. And so, overall, that should all lead to deleveraging.
And then at some point, we should get the benefits of all those investments. Those of you who visited our labs at our Investor Days in Hamburg and Lancaster will still see where all those CapEx went.
Our free cash flow after CapEx is not that big, but it's not like we're spending the money. We generate a lot of cash and a lot of that cash we invested in buildings that will be there for the next 30 or 50 years.
And that will make us even more competitive. Also the IT systems we’re investing in are really best-in-class and will give us competitive advantage going forward.
And also all the money we spent in SDI to put labs together or consolidate labs, we don't spend this because we love to spend money. We do it because once you have built those big labs and you’ve moved your business in those big labs, you are much more effective, cost effective.
Your logistic costs are lower and we can compete in a better way because we can be faster, offer better service, better careers to our employees. We work on a big campus, where they can have a range of different jobs.
So all those things should lead going forward, especially from 2021 when this program is finished to a much better margin. Our teams can more focused on clients and growth than they have been when they were moving labs around.
Therefore, all of that should allow us to deleverage. And with a bit of deleverage, we think we should get a good rating, which is what we’ll do.
And then we’ll adapt our debt mix to the circumstances. We still want to keep a bit of flexibility.
So we’ll keep some – using some bank lines, which as I said, are committed for five years. So we can – when they – the drawings expire, we draw again.
Again, it’s a committed line. And maybe we will reissue some bonds.
We’ll try to manage our maturities to have as long maturities for the bulk of our debt and to spread it even the over time.
Unidentified Analyst
Okay, thanks.
Operator
Thank you and have our next question. Caller your line is open.
Please go ahead.
Unidentified Analyst
Yes. This is [Indiscernible].
During your last session, you stated your interest commitment to all the long-term investors. And you are trying to state that you’re wishing to take if the necessary would apply.
And where do you stand today on this point?
Gilles Martin
Sorry, I’m not sure I understood your question. Do you mind repeating it?
Unidentified Analyst
Yes. During the last meeting, you stated that you were in line with your long-term investors.
And [indiscernible] and where do you stand today?
Gilles Martin
Excuse me, the line was not good. I didn’t understand at all what you were saying.
Can you speak closer to the microphone maybe?
Unidentified Analyst
Okay, I’ll try. During your last session, you stated that you were in line with your long-term investors.
And you outlined a certain number of steps that could take against short selling or other type of attacks? And my question is where do you stand today?
Gilles Martin
Yes, I see. Well, first thing, we try to give all our investors full information about what the company is doing and what our plans are and so they can make their decisions in the most logical way and not be too, let’s say, manipulated by misleading, potentially misleading information that is being spread around.
So that’s what the view. And we have some people now monitoring these types of potentially misleading rumors and we’ll take legal action if required.
So that’s one aspect. On the short selling, of course, we could buy back shares.
Our cash flow will increase. Something we could do.
We also mentioned, if at some point – that was not strictly related to short selling, but if at some point we felt that our debt is too high or that we would like to buy large assets, we don’t want to have more debt. We also have a lot of assets that we could dispose of.
We still have a lot of inbound interest on some of our assets. I mean, a lot of people have said we shouldn't own clinical diagnostics so this hasn't been lost on potential buyers who were calling us all the time saying, when do you sell French clinical diagnostic business?
And this is worth a lot of money. So there are a few assets that definitely could attract very high valuations that we could sell if we decided we should put our money elsewhere or we should run the low average.
Unidentified Analyst
Okay. Thank you.
Operator
Thank you. We'll move to our next question.
Sir, your line is open. Please go ahead.
Unidentified Analyst
Hi. I just wanted to come back to a question on the organic sales growth.
In the release, you referred to that in July the organic sales growth saw above the January to May level. And I just wondered is that above the 5.5% or above the 4.5%?
Gilles Martin
No. It's both.
5.5% is correct for Boston Heart impacts and the other one not. It's both and it's also true if we correct for days.
And of course, you should correct for days just one-month it's getting less and less meaningful. But in July, to make correction we were almost – I mean I can't say the number; we were way above those numbers.
Unidentified Analyst
Okay. And when was Boston Heart consolidated?
Which month?
Gilles Martin
No. We've had it since 2015, I believe.
But it's – the reimbursement changed in – during – in the middle of Q4 of last year so that's where we – when we started to see a very dip in revenues and answer ongoing losses. For Boston Heart, we see the effect in Q3 and Q4 the impact would be much less.
Unidentified Analyst
Got it. Thank you very much.
Operator
Thank you. And move to our next question.
Sir, your line is open. Please go ahead.
Unidentified Analyst
Hi. Thanks for the call.
I had a couple of questions. First, just on the credit, on the debt side.
Just trying to follow this move in short-term liabilities, maybe another way to think about it is that I think at the full year of December 2018, you had about €900 million of liabilities between bank borrowings and commercial paper. I think that now sits at closer to €800 million.
So I'm trying to reconcile that move with the increase in the short-term liabilities that you mentioned. It's dropping on us but it doesn't seem to be reflected in the numbers I just mentioned?
And then alongside that related to the debt, you mentioned that you see the RCF lines. Can you please tell us the amount of committed lines you have available?
I know you've disclosed that you have a €750 million commercial paper program, of which is now €320 million is drawn. Can you disclose if you have the size if you have committed RCF lines, please?
Gilles Martin
I would answer the last question while they look at the numbers. But we have a large amount of additional committed lines involve whatever we use and we want to keep it that way to have flexibility.
But we don't communicate on this because it's changing all the time also. We get permanently new lines, extend lines, so we – what we can say is we have a large buffer above which we use.
Laurent Lebras
And like I said before, I mean the increase of the short-term borrowings is mostly due to a drawing of the short-term maturities. That's pretty much the aspect of the comparative period in the previous year.
Unidentified Analyst
Okay. And then just a question for clarification.
Going back a few calls, I think you changed the auditor for your Luxembourg entity, and I believe it is now going to be audited by PwC. Can you disclose when we expect to receive those audited financials for the Lux entities?
And can you confirm that the auditor for the year just gone by would be PwC?
Laurent Lebras
Yes, we can confirm that PwC is auditing all the Lux companies so all these are mostly. And these are auditor on the finalization and this should be filed very shortly now.
Unidentified Analyst
Okay. So it would be Lux along with the group?
Laurent Lebras
No. PwC is not in charge of the group anymore.
We have changed for the year 2019 to Deloitte and PwC's audit teams are Lux all the for the 2018 period that you are referring to I'm assuming.
Unidentified Analyst
Yes. I’m just trying to reconcile the comment that you addressed to an earlier question that there will be some audits released in I think two days.
So I'm just trying to say were those were you referring to the Luxembourg audits there or not?
Gilles Martin
No. We are referring here to the opinion, I mean the limited review opinion from Deloitte for the first half of 2019.
Laurent Lebras
For the consolidated accounts.
Gilles Martin
Yes.
Unidentified Analyst
Okay. That’s helpful.
Thank you.
Operator
Thank you. And at this time, we have no further questions.
[Operator Instructions] It appears we have no further questions. So I'll hand the call back to you.
Gilles Martin
Thank you very much. Well, thank you very much to all of you for joining our call.
For all the questions. We apologize for the complexity of our accounts with this IFRS 16 first application and then the impact of the cyber attack.
This makes our account very hard to read. I – we also apologize, we are not providing – we have not focused on anything for the full – half year regarding growth because it's meaningless.
And we've done it for the end of May, that's why we tried to give you an indication on how the company is growing. We think the trend hasn't changed much after the company recovered from the cyber attack.
We think our objective of 5% organic growth for the year is an objective we can stick to. And of course, we were to see the second half of the year, it comes out.
But as far as we can see right now, it looks good. At some point, we'll get this drag by Boston Heart resolved.
And definitely next year, it won't be much of an impact anymore. So what should you be looking out for as far as your reference is concerned?
We will be continuing to move our business into those large campuses. We will be continuing to invest in our IT solutions throughout the best-in-class and also the best online tools that exist in the industry.
We are becoming more and more of an IT company. And this will – we're trying to make very good progress over the next – this year and next year.
We think we'll be there by the end of next year. The company as a whole, we do fewer acquisitions, fewer start ups.
So we'll focus for the next 18 months or 16 months now until 2020 to really get all those labs that we have built to generate good returns and good cash flow, get those start ups to profitability. And we have very growth in Asia Pacific; we are entering new market that are very exciting.
We're also positioning after 2010 et cetera, we saw that we would hit a very strong market position in Europe so we decided to look at North America. From 2011, we started to invest in North America.
We reviewed to get the same market positions there that we had in Europe, and we've achieved that. In the last seven years, we've become the market leader in pretty much all of our markets in North America as we are in Europe in very exciting markers that are – that we see are on a cyclical things linked to health is testing of new pharmaceutical products and testing food and testing the environments, also testing some of the clinical tests which we are doing at super fast growth.
Actually, in this context, if you want to stop getting ready for some announcements we may be making in the later part of the year about our new test in clinical diagnostics, you can look at the – some companies are public and are pure play there, and we have it as part of our activities. But if you look at companies like Natera or KDx, they have a very similar portfolio to what we are doing and that may help you see a bit what we are planning and why we are investing in clinical diagnostics.
We're not only investing in clinical diagnostic to have to report that the routine doesn't grow. And we do it because – and we did the routine because we think it's a good platform to distribute very advanced tests that have very high growth potential.
So maybe if you look at the analyst reports on Natera and KDx, you will see the type of tests we are working on. And that's just on a few areas.
So that's basically the outlook. We think our markets pretty good and well oriented so there's a lot of work.
And our teams have worked very hard to surmount this cyber attack. And so now they will be able to focus more on their clients.
We are thankful that our clients have stuck with us through the pain and difficulty for those labs that were affected. It is – has been a very serious event, for which we apologize.
Although, it was really criminally closed and they have been very hard to avoid. But we're working hard and our IT teams are working hard to be even more resilient and stronger.
But the good thing is now we are big enough that even in the event of that magnitude and it doesn't rock the boat all that much. So we are continuing, and we are continuing to build a great company in very exciting markets.
So thanks to all of you for joining this call. Sorry that we could not give you immediately some answers because we haven't focused so much on the offshore results because the numbers are a bit meaningless.
But if you have any additional questions, you know how to reach [indiscernible] and our IR team and we'll try to follow up with the specifics. Thank you very much and have a good day.
Operator
This concludes today's call. Thank you for your participation.
You may now disconnect.
Unidentified Company Representative
Thank you for calling.