Almost £8bn wiped off BT shares after scandal
It’s been a day to forget for BT, its executives and of course its army of small shareholders. Around 700,000 people own less than 1,600 shares, a legacy of the telecoms group’s privatisation in 1984.
And they as much as anyone will be shocked by the 20% plunge in the company’s shares after it revealed a worse than expected hit to its figures from an accounting scandal in Italy, not to mention a warning of a slowdown in business elsewhere.
Some £8bn was wiped off the value of BT as its shares fell from 382.55p to 303p, its lowest level since June 2013.
That in turn knocked 26 points off the FTSE 100, which would otherwise have been firmly in positive territory rather than slipping slightly into the red.
So where now for BT shares? Neil Wilson, senior market analyst at ETX Capital, said:
BT’s 20% drop today fairly rattled the City. It was one of the biggest ever single-day falls for a company of this sort. Blue chips like BT just don’t make those kinds of losses on one announcement about a part of the business that accounts for just 1% of earnings.
So is this a golden buying opportunity for investors, or does BT merit a fundamental recalibration of its stock price based on the news?
First, the upside. BT is now looking very cheap on a price to forward earnings ratio (about 10 times). That appears like mightily good value for a company that pays juicy dividends and says it will continue to increase these by 10% a year over the next two years. That could mean a roughly 4% yield for buyers entering now, which if it can manage to deliver is a pretty attractive return.
It’s also dodged a bullet or two by retaining control of Openreach, the jewel in the crown, despite pressure from Ofcom. The acquisition of EE enables to become a genuine quad-play provider. Sports broadcasting is also improving revenues but at a fairly hefty cost.
The downside, however, looks ominous. The Italian fiasco will gobble up a whopping £500m in free cash in 2016/2017 and a further £500m in 2017/18. Although BT has largely completed its investigation, there is a risk that this could blow up further and it’s wise to be cautious. The Financial Reporting Council could take this further.
Operating costs seem to be rising, as are debts. Acquisition of EE, while a strategic long-term play, has meant net debts have risen to nearly £10bn. That is also the figure for BT’s pension black hole, which it has to review this year.
Another red flag is the outlook for UK public sector and international corporate markets, which BT says has deteriorated, meaning it expects a double-digit year-on-year percentage decline in fourth quarter underlying EBITDA adjusted for the acquisition of EE. That is a big concern and signals that investment is drying up. All this points to growing pressure on free cash, which BT needs to keep growing the dividends.
On that note, it’s time to close for the evening. Thanks for all your comments, and we’ll be back tomorrow.
European markets end higher but FTSE 100 hit by BT fall
There is a degree of caution around the markets, as investors await more decisions from US president Donald Trump after his protectionist rhetoric so far. And with the US reporting season underway, they are also looking to see whether companies can justify their hefty valuations with their results.
Overall, with Wall Street higher by the time Europe closed - with the Dow Jones Industrial Average up 61 points or 0.3% - continental markets ended the day higher.
News that the UK parliament had won the right to a vote on Brexit did little to support the pound, which is currently unchanged at $1.2530 having earlier fallen as low as $1.2419. Jasper Lawler, senior market analyst at London Capital Group, said:
The [UK supreme] court ruling sent the British pound lower, though it finished well off its lows. There was an element of ‘buy the rumour, sell the fact’ in currency markets to the well-telegraphed decision. In all likelihood Article 50 will still be triggered in March irrespective of the supreme court. In many ways this is just one less roadblock out of the way before the UK leaves the EU. If anything, the net effect leans towards a harder Brexit in that Scotland and the devolved assemblies, which mostly voted to Remain in the EU, will have less say.
So with the pound failing to gain ground, the FTSE 100 was open to reacting to any shocks, and an unexpected profit warning from BT after worse than expected accounting irregularities in Italy certainly fitted the bill. BT’s decline knocked 26 points off the leading index, which otherwise would have been well in positive territory. The final scores in Europe showed:
- The FTSE 100 dipped 0.84 points or 0.01% to 7150.34
- Germany’s Dax added 0.43% to 11,594.94
- France’s Cac closed up 0.18% at 4830.03
- Italy’s FTSE MIB finished up 0.89% at 19,499.54
- Spain’s Ibex ended up 0.89% at 9387.2
- In Greece, the Athens market added 1.13% to 646.51
Back with BT, and Reuters is reporting that Italian prosecutors are opening their own investigation into alleged false accounting and embezzlement at BT Italia.
Meanwhile a number of US law firms which specialise in shareholder class action cases say they are looking at whether BT violated federal securities laws.
Updated
US home sales fall in December
But existing home sales in the US fell by more than expected in December, as the supply of houses on the market dropped to levels not seen since 1999.
The National Association of Realtors said existing home sales fell 2.8% to a seasonally adjusted annual rate of 5.49m units, compared to forecasts of a 1.1% decline to 5.52m. But overall sales for 2016 rose to 5.45m, the highest since 2006, from 5.25m the previous year. Lawrence Yun, the association’s chief economist, said the housing market’s best year since the Great Recession ended on a healthy but somewhat softer note:
Solid job creation throughout 2016 and exceptionally low mortgage rates translated into a good year for the housing market. However, higher mortgage rates and home prices combined with record low inventory levels stunted sales in much of the country in December.
While a lack of listings and fast rising home prices was a headwind all year, the surge in rates since early November ultimately caught some prospective buyers off guard and dimmed their appetite or ability to buy a home as 2016 came to an end.
Better than forecast US manufacturing data adds to rate rise expectations
US manufacturing has got off to a good start in 2017, with overall conditions improving at the quickest pace for two years.
The initial Markit manufacturing purchasing managers index for January came in at 55.1, compared to expectations of a figure of 54.5 and a rise from December’s final figure of 54.3. Chris Williamson, Chief Business Economist at IHS Markit said:
US manufacturers are seeing a bumper start to 2017, with production surging higher in January on the back of rising inflows of new orders.
New work is growing at the fastest rate for over two years, thanks mainly to rising demand from customers in the home market. Export growth remains subdued, stymied by the strong dollar.
The survey results suggest that faster manufacturing growth and inventory rebuilding should help boost GDP in the first quarter if current trends persist in coming months. Rising factory employment should also help improve consumer morale and spending.
However, with such strong growth being signalled and price pressures rising, speculation around the next Fed rate hike will intensify.
Updated
Wall Street struggles into positive territory
With US investors awaiting more details of President Donald Trump’s tax and spending plans, the main impetus for the market has been his protectionist stance on trade, including pulling out of the Trans-Pacific Partnership.
So Wall Street is currently searching for direction, as the US reporting season gathers pace. The Dow Jones Industrial Average is up 13 points or 0.07% while the S&P 500 and Nasdaq Composite both opened marginally higher.
Shares in broadcaster ITV have jumped by over 5% today, on speculation that a bid battle could be coming.
The rally sparked by the Evening Standard’s Jamie Nimmo, who reported that several US companies are interested....
He writes:
Chatter in the Square Mile that Liberty Global could buy out ITV is nothing new, but rumour has it that the Virgin Media owner may face competition from some of the world’s largest companies.
The word on the street is that major shareholders of ITV have been sounded out by tech giants Apple, Amazon and Netflix about a possible takeover.
They are thought to have been enticed by the cheap pound and ITV’s production arm — behind shows such as Mr Selfridge and which has been growing over the past few years through acquisitions.
The gossip suggests the US giants are willing to pay 300p a share, valuing ITV at around £12 billion.
More here:
Market report: Buzz as US suitors rumoured to be eying ITV takeover https://t.co/GBz7on1UHM
— Jamie Nimmo (@JamieNimmo63) January 24, 2017
ITV’s shares are currently changing hands at around 210p - a long way from 300p, suggesting the City isn’t convinced a bid is coming. One to watch though....
Microsoft 'reaffirms' commitment to UK amid Brexit fears
Software giant Microsoft has just released a statement, insisting that it remains committed to the UK following reports that Brexit might disrupt its operations.
The comments reported today by a Microsoft employee were not reflective of the company’s view. As we have said both before and after the EU referendum vote, Microsoft’s commitment to the UK is unchanged. In particular, those customers in our UK data centres should continue to rely on Microsoft’s significant investment plans there.
Which employee, I hear you cry...
...well, it’s Microsoft’s UK government affairs manager Owen Larter. Yesterday, he told a webinar that importing hardware to the UK could become too pricey, if tariffs were imposed after Britain leave the EU.
Larter said:
“If all of a sudden there are huge import [tariffs] on server racks from China or from eastern Europe, where a lot of them are actually assembled, that might change our investment decisions and perhaps we build out our datacenters across other European countries.”
Brexit pushes sterling down
The pound is falling further as the UK government pushes on with its Brexit plans following today’s supreme court ruling.
Sterling is currently down 0.5% at $1.246. having hit $1.253 earlier in the day.
It fell as Brexit secretary David Davis told MPs that a bill seeking permission to trigger Article 50 will be introduced within days.
FXTM research analyst Lukman Otunuga says ‘hard Brexit fears’ have been fuelled by the judges’ ruling that the devolved administrations needn’t give their approval for Article 50 to be triggered.
Although today’s ruling has provided some clarity in the short term on the steps needed for Brexit to happen; the pending Brexit fuelled debates with the Parliament and potential complications could create a new layer of uncertainty consequently weakening the Pound.
Breaking: UK bank HSBC has announced plans to shut 62 branches across the UK.
The move will cost 180 jobs, and is part of the bank’s cost-cutting programme.
With more customers using electronic banking services, HSBC argues that it needs fewer physical branches.
The BBC’s Simon Gompertz has got hold of a list; it includes branches in Blackpool, Chipping Norton, Newquay and Warwick.
Here's the list of the 62 new HSBC branch closures https://t.co/cnp2STK11v
— Simon Gompertz (@gompertz) January 24, 2017
Today’s tumble makes BT’s shares rather more attractive to investors on a price/earnings basis.
The company still expects to grow its dividend by 10% per share this financial year, and in 2017-18.
But the Italian accountancy scandal, and the warning that BT’s UK’s public sector business is slowing, are reasons to be cautious.
Chris Beauchamp of IG says:
At ten times forward earnings, the shares are now the cheapest they have been since early 2013, but the fundamental case for investing, aside from the dividend, has still to be proved.
Here’s Nick Fletcher’s news story on BT’s Italian problems:
BBC: BT's European head to resign today
The BBC’s Simon Jack is reporting that the head of BT’s Continental Europe division, Corrado Sciolla, will resign today.
Head of BT Europe, Corrado Sciolla will resign this pm over 530m accounting scandal at BT Italy. Serious internal & ext auditing errors
— Simon Jack (@BBCSimonJack) January 24, 2017
Sciolla is a former boss of BT Italy, who was promoted to become president of Continental Europe four years ago.
Here’s his biography, from BT’s website:
Corrado is responsible for making sure we grow quickly and profitably across Europe - where we serve big brands like Fiat, ENI, Syngenta and The European Parliament.
Corrado’s career started as a McKinsey consultant, then he had various directorships at Stream (an Italian pay-TV firm), Syntek Capital, and Wind Telecomunicazioni (Italy’s second-biggest fixed and mobile telecoms operator).
In 2004, he became managing director of Albacom, a joint venture between BNL and BT. When BT bought Albacom outright in 2006, he became CEO of BT Italy and – in 2011 – president of BT France as well.
Corrado is Italian. He has an electronic engineering degree from the Polytechnic University of Turin and an MBA from the INSEAD business school.
Exclusive. Head of BT Europe to go. Corrado Sciolla most senior head to roll over BT accounting scandal. full story https://t.co/8Ts9Ig84hh
— Simon Jack (@BBCSimonJack) January 24, 2017
Updated
There’s no respite for BT’s share price this morning; it’s still down almost 18% at 314p, which knocks over £6bn off its value.
The accounting scandal in Italy (details), and the news that BT’s UK business is slowing too, are alarming the City.
George Salmon, equity analyst at Hargreaves Lansdown, says there were already concerns about BT’s debt and its pension black hole:
“The revelation that accounting deficiencies in Italy are worse than previously thought is a bitter, and needless to say unwelcome, pill to swallow for BT investors. With news that its Business and Public Sector division is coming under pressure too, worries about the group’s ability to fund its generous dividend policy will surely grow.
Full year profits are now expected to be around £300m lower than had been hoped, with around £500m of 2016/17 free cash flow disappearing. Just about the only guidance that was left unchanged is the dividend, where the group is still targeting at least 10% increases this year and next.
With the group’s net debts pushing £9.6bn following the acquisition of EE, and a review of the how to fund the £9.5bn pension deficit coming up in June, there were already a few jitters around the stock so this was the last thing the group needed.”
Boost for Philip Hammond in public finance figures
On the surface, the latest figures on the UK’s public finances were worse than expected, with a marginally bigger deficit than predicted in December. But the release should still provide some cheer to chancellor Philip Hammond with revisions to November’s figures meaning he now looks more likely to hit his borrowing target for the full year.
Public sector net borrowing decreased by £0.4bn to £6.9bn in December 2016, compared with December 2015, the Office for National Statistics said. The consensus forecast was for a bigger drop to 6.7bn in a Reuters poll of economists.
Public sector net borrowing (excl public sector banks) decreased by £0.4 bn to £6.9 bn Dec 16, compared with Dec 15 https://t.co/X7MMWsdcgw
— ONS (@ONS) January 24, 2017
In the current financial year-to-date (April to December 2016), the public sector borrowed £63.8bn. That was £10.6bn lower than in the previous financial year-to-date, helped by a smaller deficit than previously thought for November. The Office for Budget Responsibility (OBR) is forecasting full-year (April 2016-March 2017) public sector net borrowing of £68.2bn.
UK public sector #borrowing £63.8bn for financial year-to-date; £10.6bn down on last year; lowest y-t-d since 2007/8 https://t.co/NhzTvzUhKj pic.twitter.com/h5jbPhKaQX
— Fraser Munro (@FraserMunroPSF) January 24, 2017
Scott Bowman, UK economist at the consultancy Capital Economics said the fall in borrowing in December continued the recent trend of a gradual improvement in the public finances. Explaining the pattern, he said:
The improvement was mainly driven by a 5.6% annual rise in central government receipts, while spending actually fell slightly on a year earlier. And looking through some of the monthly volatility, receipts growth has been on a slight upward trend since May – adding to the evidence that the economy has held up well following the vote to leave the EU... We think borrowing should come in slightly below the OBR’s current £68bn forecast for the 2016/17 fiscal year.”
Suren Thiru, head of economics at the British Chambers of Commerce (BCC), sounds a cautious note about the future state of the public finances as the Brexit process unfolds.
The UK’s fiscal position, which was weakened significantly by the financial crisis, is likely to come under increasing pressure in the near-term if UK economic growth weakens as expected. A slowing economy would further restrict the UK’s capacity to collect enough tax revenue to consistently achieve deficit reduction in the coming years.
More needs to be done to boost business confidence, to help firms to deliver the sort of growth, investment and job creation needed to achieve a sustainable strengthening of the UK’s tax base.”
Pound volatile as supreme court gives Brexit verdict
As predicted in our agenda, the pound has flailed around as Britain’s top judges delivered their verdict on Britain’s exit from the EU.
The supreme court ruled by 8 votes to 3 that the government cannot trigger Article 50 without parliamentary approval. That sent the pound up to $1.2535, suggesting traders reckon this could slow the Brexit process.
But the pound then fell back as the judges announced that the devolved assemblies in Scotland and Northern Ireland do not need to give their own assent. That removes one possible hurdle to Britain’s exit from the EU.
Andy Sparrow’s politics liveblog has full details and rolling reaction.
Updated
In other news, Europe’s factories and service sector firms have made a solid start to 2017.
Data firm Markit’s monthly eurozone PMI has come in at 54.3, down slightly from 54.4. Any reading over 50 shows growth.
Firms added new jobs at the fastest rate in 9 years too, while factory growth hit a five-year high. Encouraging stuff.
Manufacturers in the eurozone have reported their best month since 2011 https://t.co/88VBa4QsOM pic.twitter.com/SNZU6cVLSq
— fastFT (@fastFT) January 24, 2017
BT’s shares are popular with small shareholders, some of whom will have held them since the company was privatised in 1984.
So today’s share plunge will have hit them in the pocket (although BT says it hopes to keep raising its dividend over the next couple of years)
The Share Centre, a retail stockbroker, have put their ‘buy’ recommendation on review.
Helal Miah, investment research analyst, says:
“On top of BT’s big pension deficit and grumbles amongst rivals and users of its infrastructure network, today’s news has further dented investors’ confidence in the group.
We too, have become more cautious and have placed our current ‘buy’ recommendation under review. However, this may be an attractive idea for investors taking a contrarian position and, provided the group maintains its dividend, then it could become a good income option.”
Here’s Mike van Dulken of Accendo Markets on BT shock warning:
This morning sees BT Group (BT/A) shares -16% to trade levels last seen in mid-2013. Just as brokers and investors were prepping for FY results on Friday, the company delivers a profits warning linked to an existing accounting scandal at its Italian business. Continued investigation since October (internal + external) has shown the extent of impropriety (sales, purchase, leasing) and overstatement of profits to be far greater than initially thought. Management has been forced to more than triple its expected write-down to £530m and admit that FY revenues, profits and cash flow will be lower than consensus. Last October’s suggestion of a £145m charge didn’t cause too many ripples as regulatory issues and a rising pension deficit hogged the headlines. Today’s admission adds this to these nasty headwinds, especially as it could weigh on profits for the next two years.
Even management isn’t sure what the final figure will be. The group still expects 10% dividend increases for the next two years but is this enough to appease disgruntled shareholders who had already been wearing a 20% downtrend since early 2016. The increases may, however, attract newbies via a 4% yield. Assuming this can be honoured….
Updated
We’ll get more colour on BT’s business on Friday, when it publishes its third-quarter financial results.
Today’s announcement was rushed out once the company had calculated the full cost of its Italian accounting problems.
Under City rules, a company can’t keep a problem of this magnitude to itself.
Updated
Q: Why were the accounting irregularities BT Italy not discovered a lot sooner?
BT says that it “needs to reflect” on why they were not spotted by BT Italy’s management, the wider Group, or by its auditors.
But it is “far too premature” to say anything about the auditors this morning
This is turning into a full-blow rout:
Make that down 19% for BT shares and on track for the biggest fall ever after "improper" accounting practices at its Italian unit. pic.twitter.com/rCRw2J1F7s
— Jamie McGeever (@ReutersJamie) January 24, 2017
This is a “dark day” for BT, says city analyst Neil Wilson of ETX Capital.
He says investors are selling up, on fears that there are deeper problems at the telecoms firm.
The group’s own investigation of accounting malpractice in its Italian business shows the situation is far worse than it first thought – the bill is now thought to be around £530m, well above the £145m initially forecast.
According to BT, this will mean a reduction in Q3 adjusted revenue and adjusted EBITDA of around £120m. Free cash flow will be £100m worse off.
For 2016/17 as a whole the problems will have a negative revenue impact of around £200m, while denting normalised free cash flow by up to £500m. The impact on 2017/18 is expected to be just as bad and that is likely to have a material impact on its ability to return cash to shareholders, although BT says it still expects to grow dividend per share by 10% in each of those years. The problem is that investors will fear that this is not the end – what else will be uncovered? The costs could yet rise and that fear is driving the selling this morning.”
BT’s shares are now down 19%, which wipes £6bn off its market capitalisation.
The Italian business will need a lot of work before it can be a growth business, Patterson says, predicting that it has probably been unprofitable for a number of years.
BT CEO: Accounting scandal is restricted to Italy (we think)
CEO Gavin Patterson also warns that BT is feeling the impact of higher inflation, so 2017 will be a lot tougher
Q: Is BT now inspecting its other overseas businesses for signs of accounting problems?
Yes, Patterson replies, and BT doesn’t believe an issue like this exists elsewhere in its business.
This accounting scandal appears to be “specific” to the Italian business, he continues. It’s a very complex set of manipulations, involving a lot of people over many years.
BT Group shares down 15% as it cuts its revenue & earnings forecast for the next 2 yrs after accounting issues in its Italian business.$BT pic.twitter.com/8NwoHeCFTh
— IGSquawk (@IGSquawk) January 24, 2017
Updated
BT also sees UK market slowing
As if BT didn’t have enough problems right now, it is also warning that the UK market is slowing.
The outlook for UK public sector and international corporate markets has deteriorated, says CEO Gavin Patterson. That is potentially down to the wider economy, and potentially down to the Brexit vote.
BT CEO Gavin Patterson is briefing City analysts on a conference call now. I’ve dialled in.
Patterson says he is “deeply disappointed” by the inappropriate behaviour uncovered at BT Italy, and confirms that several executives have left the company after being suspended.
Financial results have been overstated for several years, Patterson says, so BT is now working out the full impact on the overall Group’s results.
We take the situation at our Italian business extremely seriously, and are taking efforts to strengthen its procedures, Patterson continues.
BT shares have hit their lowest level in two and a half years, and are on track for their worst day since the financial crisis of 2008.
The City really isn’t impressed by these serious accounting mistakes at the company’s Italian arm.
£5.5bn wiped off BT's value as shares plunge
Boom! BT shares have plunged by 15% at the start of trading.
That wipes more than £5.5bn off the company’s value, and sends it sprawling to the bottom of the FTSE 100.
BT profits warning: instant reaction
City analyst Louise Cooper says this scandal does not reflect well on the City:
BT admits to "inappropriate behaviour" in its Italian business "improper accounting practices"
— Louise Cooper (@Louiseaileen70) January 24, 2017
"Overstatement of earnings"
By £530mn!!!!
BT has overstated Italian earnings by half a billion pounds
— Louise Cooper (@Louiseaileen70) January 24, 2017
Says a lot about corporate culture
And it's not good
And this is from Reuters’ Amanda Cooper:
"Inappropriate accounting behaviour" gets MY vote for Euphemism of 2017 - BT cuts outlook on Italy accounting errors https://t.co/QzTbasVG6A pic.twitter.com/2bknwnzGBm
— Amanda Cooper (@a_coops1) January 24, 2017
BT shares could tumble by 8% in early trading, warns City veteran David Buik.
BT - BIG write-down in Italy - shares may be down 8%!!!
— David Buik (@truemagic68) January 24, 2017
BT admits true scale of Italian accounting scandal
Telecoms group BT has just shocked the City by announcing that the accounting scandal at its Italian division is much worse than previously thought.
The FTSE-listed company is slashing its revenue, earnings and free cash flow forecasts for this year, and next year. It has also suspended several senior executives from BT Italy who have already left the company.
An investigation by KPMG has uncovered that “the extent and complexity of inappropriate behaviour in the Italian business were far greater than previously identified.”
KPMG found that the division used “improper accounting practices” and a complex set of improper sales, purchase, factoring and leasing transactions.
This has driven the cost of the scandal up to £530m, sharply higher than the £145m which BT announced in October.
This is going to have a serious impact on BT’s business. It is now predicting no revenue growth over the next two years, and cutting its guidance for EBITDA profits from £7.9bn to £7.6bn.
Gavin Patterson, chief executive of BT Group, says:
“We are deeply disappointed with the improper practices which we have found in our Italian business.
We have undertaken extensive investigations into that business and are committed to ensuring the highest standards across the whole of BT for the benefit of our customers, shareholders, employees and all other stakeholders.”
BT has appointed a new boss of BT Italy. He takes charge on 1 February, and will work on improving the “governance, compliance and financial safeguards in our Italian business”.
In short, this is pretty serious. I’ll pull together some reaction now.
Updated
The agenda: A big day for sterling?
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Investors in City have plenty to think about today. At 9.30am, the UK supreme court will rule on whether parliament must give its approval before Britain can begin its departure from the European Union.
That news will be liveblogged in another place, but we’ll be watching too as the decision will move the markets.
Owen Bowcott, our legal affairs correspondent, explains how the ruling will affect the Brexit timetable:
The ruling by the 11 justices will resolve whether the government, through its inherited use of royal prerogative powers, can formally initiate article 50 of the treaty on European Union (TEU) without the explicit approval of MPs and peers.
Article 50 begins the process of the UK’s withdrawal from the EU. If a majority of justices decide, as is widely expected, that parliamentary support is required, then the judgment could specify that legislation is needed.
We also get the latest UK public finance figures at 9.30am, covering December.
Economists predict that Britain borrowed around £6.5bn to balance the books last month.
Data firm Markit is reporting its latest PMI surveys for the eurozone this morning, showing how manufacturing and service companies are faring this month.
Over in parliament, the Business, Innovations and Skills committee is holding a hearing into executive pay and boardroom diversity, also starting at 9.30am.
They’ll hear from Sir Philip Hampton who chaired a review into how to get more women into City boards, along with Baroness Sarah Hogg, Tom Gosling of PWC, Simon Fraser of Investor Forum, Ken Olisa of the Institute of Directors, and Andrew Ninian of Investment Association.
Updated
