AS Virsi-A (VIRSI) Earnings Call Transcript & Summary

Ladies and gentlemen, good morning. We're delighted to welcome you to Virsi Investor Webinar. Today, we're hosted by Virsi Chairman of the Management Board and CEO, Janis Viba, as well as member of the Management Board and CFO, Vita Cirjevska. During the webinar, you will be introduced with Virsi's most recent key activities and financial results as well as an insight into company's future plans. [Operator Instructions] The recording of this webinar will be available shortly after this session. Now let me hand over to Janis Viba.

Thank you, [indiscernible] Hello. Good morning, dear participants of the webinar. Yes, well, we had quite a strong period in the last 6 months full of activities. So today, together with Vita, we will tell you more about it. So let me start by reminding what are the key business segments in which we are operating. So the our Convenience Store segment, we have Fuel sales and we have also Energy and what we would like to stress is that in terms of gross profit, the rate of gross profit, we see that in last 6 months, Store and Energy segments actually combined exceeded 50% of this gross profit on group level, which is completely in line with our overall strategy that we would like to have a less dependence on our Fuel sales in future, and we want to diversify our business model. And this is on top of the fact that actually Fuel sales increased quite a lot, but the Store and Energy segment was actually developing even faster. Now let's go maybe to a bit broader view. So what's happening in the Energy markets. So we have Fuel, Natural Gas and Electricity as our key products. In Energy market. And if we talk about Fuels, we obviously see that back in February, there was embargoing post on Russian oil and oil products. And we see that, obviously, Europe has become much, much, much less dependent on Russian oil. And this Russian oil now is obviously going to Asia markets, particularly in Europe -- sorry, in China and India. And in terms of volume, these Russian oil actually has not decreased significantly. It simply has changed the places where it's going so because of that, obviously, Europe has less oil coming from Russia, which is obviously giving some pressure on the pricing of oil. On top of that, obviously, we see that the OPEC countries are trying to limit oil supply so that it would have some effect on price increase. And we also see that global growth in economy is actually still in place. It's not so that there is a huge recession overall. So it means that demand for oil products is still quite significant. And therefore, in the last couple of weeks, we actually see that there is some price increase in oil products. If we go next to this Natural Gas market, we see that obviously, there was a huge fluctuations after Russian aggression happened to Ukraine. The prices are exceeding even at some point, EUR 200 per megawatt. But now we are actually back in a level which we see in 2021 and that is mainly because Europe has adopted to this new situation. Europe has increased hugely this capacity in LNG terminals and therefore, natural gas in Europe has now become much more less dependent on pipelines, but instead, it is using LNG for this purpose. And as a consequence, we see that the storage levels of natural gas is quite high. And therefore, the prices are somewhat lower than in previous quarters and back to 2021 level. And locally, if we speak about our regions and we see that terminals in Klaipeda [indiscernible] and in Inkoo in Finland are operating. Therefore, this risk of, let's say, LNG shortage in our region is obviously becoming quite small. Electricity segment, here again, obviously, it's very correlated to the pricing of natural gas. We see that lower natural gas is impacting also lower pricing for electricity. And therefore, in the last couple of quarters, a decrease in pricing level for electricity is quite huge. But still currently electricity is still around 2x more expensive than it was in a period before the Russian invasion in Ukraine. And additionally, what we see is that there is a huge uptake in this solar capacity. Solar energy is being produced. And therefore, there are some days when the electricity pricing in the middle of the day, if it's a sunny day and especially if it is also a rainy day we see that electricity pricing is approaching even 0 or even negative territory. And yes, the other things is that in Latvia, we saw quite a big, let's say, [indiscernible] floods, flows in Daugava River and that actually impacted our electricity generation capacity. And therefore, we see that pricing was also quite decreasing in Q2 in Latvia locally. So all in all, that's a big picture about energy products. And then let me maybe go next to the -- some of the highlights of what we have done in the last 6 months of 2023 because there has been quite an extensive job being done in various areas. And maybe I'll start with development of station networks. So in this period, we increased our number of stations by 2 and these 2 stations are franchise stations in region of Eastern Latvia. And this is quite important because in these places, we were not yet there. And therefore, this is obviously improving our geographical location. And therefore, we are able to make more market share gains and then there are a couple of stations in which we are working. You also are seeing some of the pictures where we are either fully renovating the stations or we are building some new stations to the, for example, in [ Satekles iela ] there is a station, which is offering only fuel currently. We are building a new shop next to this station. And then there is [ Ulmana ] , which is another place where we are constructing a new service station because near this new station is already existing station, which is showing very promising results, and this is obviously motivating us to expand this network even more in that region. So that's new stations. Then we are working on some new products and other initiatives, which are, let's say, the ones which require quite heavy work over the last 6 to 12 months. And we are now ready finally to launch these products and projects, but we will tell about them a bit shortly. So you can enjoy them in rest of the webinar. Also important to note that we are still working on expansion of electricity charging stations, together with funding from European Union institutions. We are now able to already offer this product in 9 stations where the power is around -- combined power is around 200 kilowatts, but the single power from single plug-in is 160. And these 9 stations which are already operating, they will grow to at least 14 stations by end of the year and to some 20 stations in the first half year of 2024. So it's developing rapidly and we see that actually the statistic shows that customers are valuing this product despite the fact that it is still taking quite a small below 1% market share of overall cars in Latvia. And then for those webinar participants, which are maybe in Latvia, next week, you are finally invited in August 16 which is Wednesday to visit station in [ Ulmana ] where we will have a, let me call it like celebrations about the fact that we already have launched quite a big number of new stations in [ Electricity ] and then there will be several initiatives. For example, we will be able to drive some new models of electricity cars. If you will come by your own car, you will get free charging. So there are some other things. So if you are able to please join us next Wednesday. Sustainability, very obviously important segment in which we are still developing quite a lot of initiatives. So already half of stations -- almost half stations are equipped with solar panels and summer, for example, around up to 20% of electricity is being produced with solar panels in those stations where they are located. And also important that starting from 2023, we can officially say that all electricity, which is consumed on group level is produced from Latvian producers, which are producing electricity from renewable resources. So that's say quite, I would say, important step which we have taken in terms of sustainability. And then obviously, we have established also a sustainability group, in which employees from various functions are able to take part and come up with some new initiatives, which we have been evaluating on Board level and the ESG report, which will be same as last year's, which will be published in September. So that's on sustainability. Then we also had an exercise where we refreshed our mission, vision and values of the company. First time we did it was actually in 2019. Now in '23, we did like a -- not a rebranding, but refreshing exercise to this and now we have a clear vision and mission and values updated according to the current situation in which we are operating because a couple of years ago, we still did not have this energy segment now we have it. So we made some changes so that employees have this, say, guidance, what we are expecting from them and where we want to be as an organization. So that's about a few items which happened in first half of 2023. And now Vita will tell more about stores.

Yes. So the convenience store, let's go and about the Convenience store development and challenges in this first 6 months. Actually, they can be split in two sections, one is innovation and one is sustainability. If you look at the innovation part for a lot of you watching and -- or other subscribers on public channels there was a robot that came out this week and that made quite a big noise in the market. Actually, we are working quite a lot on new products in the fuel stations and also working on the strategies on the new sales channels. If we look at the Virsi Coffee, actually, it's already in this August from the beginning of the August, also available on the store chain tops in Latvia. So that's available on quite more many places than the only fueling stations. It's also in the stores and in much broader network than it was before already in the August and in the second part of the year, we will see the actual results of demand in there. We're also working on several projects that are sort of new kind of sales channels, new kind of shops and I'll present to them later in this presentation. At the same time, we have been working also on our product itself, and we are reviewing this from the side of sustainability and ESG perspective. We are also evaluating this life cycle of products and also the storage and the way the store is actually built and products are sort to have less leftovers in the production process and to be clear about who is the supplier and how we do cope with the leftovers when the life cycle of the product ends. In this first half of the year, there has been a huge program and an investigation and actually like sculpturing of the coffee product and the leftovers of the coffee production process are already in the biogas station. So if we look at the coffee already itself, it has full scope and it is fully aligned with the sustainability requirements we have set up on ourselves. And in a further period, we plan to go over rest of the products, analyze them and try to improve at all levels and all processes that we can. Of course, this has been also a challenging period from network side in labor market. And if in the past period, we've also stressed over this labor market side dynamics and the problems with that in 2021 and 2020. It was mostly because of the sick leaves, mostly because of COVID and pandemic regulations than actually this year and it's actually started already in the past year, that are quite a challenging situation in the labor market because Latvia is experiencing the lowest rate of the unemployment and actually dynamics in the labor market price rate, especially in the market segment, they are quite challenging. And if we look at the -- I don't know, the public information, how the rate has been changing over the past 3 years, there would be a roller coaster and it's upside, and it's also challenging for us to manage labor costs on the profit and loss side. But all in all, I think we are in a good position in the market. And also with the labor requirements and we are trying to make this environment for our employees, the best we can and change the rate in a way we see that it's applicable and compatible in the market. If we look at the Store results, it also showed the good dynamics. Actually, the economics are still in turbulent position in Latvia. But if we look at the growth rate of Virsi Store turnover, we see that there is a growth of 23.8% by Nielsen data that serves all the petrol stations, but the network itself has been growing by 16.5% and that's including the Virsi growth. So we can say that we are in a quite strong position and we continue to grow our market position. And we see that this growth continues over the past period as well, and we see that is a prosperous future in this segment as well for us there. And now about the Innovation. The one I just told you before is the coffee robot, which actually made a big sound in the market in this week and made quite big interest in the public. And of course, everybody evaluates this new employee of Virsi from its own perspective, how acceptable it is for you to see the robot working instead of the person, but this is quite interesting start, and we suggest you all to visit Spice Shopping Center and have this experience and see how our barista works. And if we see in the fueling stations that coffee has always been more attractive to the family deal, the oldest members of the family. And then this small start that will be also a very interesting place for our kids, and you can get more than 20 drinks from our barista applicable for any taste. This has been like the first -- the second step in the August where we have been stepping out on fueling stations with our coffee -- with our stores itself. As I mentioned, we are in a top shop network with coffee and now also with the coffee robot in Spice Shopping Center. And then we also have the third innovation for our network, and it's opening up in September this year. We have had a lot of requests for our clients in the center of the Riga where there has not been any Virsi coffee, but there are a lot of Virsi coffee lovers. So from the September of this year, [indiscernible] Street 24 in the very center of Riga, we have found the place that is, we believe, the best fit for Virsi stores. And we will have the first Virsi store itself without fuel products. But with new updated and more extensive shopping offer. So if you are in Riga, don't hesitate to visit and your welcome.

Yes, definitely. Okay. So let's go to Fuel. What is happening in the market is that we still see that biggest players are continuing to increase market share which effectively means that this market consolidation is still happening. We also see that there is quite a big, let's say, competition or fight for retail segment because, obviously, we are gaining the market share, someone is losing it and nobody wants to lose the market share. So there is a lot of promotions, discounts and the marketing activities which are negatively impacting the margins of the product. But overall, what we have done is a really strong performance in terms of fuels amount sold. So we have increased our volumes by more than 14% in last 6 months versus last year while in Latvia, overall, the increase is only a bit more than 2%. So it's quite a significant market share gain. And we will obviously continue to do it in similar pattern in future. And then also on alternative fuels, I remind that we are still the only ones which are offering CNG product in the Latvian market. And we are actually happy to see that this market is still growing despite the fact there were some challenges with the price of natural gas in the last couple of quarters. But what we see is that we are able to grow CNG amount by 18% versus last year, which is obviously showing that our customers are still valuing this less CO2 product, which we are offering. And in terms of electrical cars. This is a market which is increasing, obviously, and we hope currently around 5,000 electrical cars in the market but still given the fact that total market is much higher or larger. So these 5,000 cars are constituting around 0.6% of the total market. So overall, I would say, quite strong performance from fuel market. And which is also important to note is that there is a project which we are working -- have been working for quite a long time, I would even say. And we have finally launched a mobile application in Apple Store and Google Play in August 9, which is basically Wednesday this week. And now any customer who is visiting our stations is able to download this application and very simple, choose which product to fill and basically to pay by not going into the store. That's one thing. But another thing is that, obviously, this app can also be used to have some paying functionality also on store products and having these discounts on store products and which is also important that finally, you can get rid of your plastic card, you can obviously combine it with your bank card and mobile app and in that way, become a bit, bit more nature friendly. So I would really invite everybody to try to test the stuff, which is very fresh. Of course, we understand that there might be some, few maybe issues at first. But currently, what we see is that this popularity is growing quite significantly for this app and hopefully, we will continue in the same way. And then on Electricity, a couple of things. So that's our third segment or Energy segment in which we are working. You can see that this electricity which we are selling to our customers internally in Latvia and also outside of Latvia is growing very rapidly. So in the first half of 2023, we actually sold already 100 circa gigawatts of electricity, which is quite a significant amount, given the fact that we only launched this segment only around 2 years ago. And therefore, we see that our B2B customer portfolio is increasing in our Electricity segment quite significantly. We are also working extensively with more than 60 producers of renewable electricity in Latvia. And also actively trading this renewable electricity, which we have bought this trading certificates so that there are quite a big demand for these green certificates, which are proving this green or renewable origin of our electricity and is becoming like a revenue stream for us. And also important thing, very important. We already announced that we are working on electricity product for households, and we can officially announce that in by end of September, we will launch this product into the market. Currently, all employees already are using this product, and we will be ready by end of September to launch this product for households. So anybody who is interested from your side, of course, please join this product because we are feeling that it will be a very strong product in the market. And you can also -- you will be able to combine this product with our already existing products and, therefore, have a quite a stronger product package to use. Okay? Finance?

Okay. We can -- I will start our financial ratios presentation with a bit of look at the Latvian market, as I do it always. And if you look at the GDP growth in last 6 months of Latvia there has been ups and downs in respect to the quarterly changes in the first quarter, there was plus 0.8%, and then there was a drop of 0.9%. Still, Latvian Bank sees that this year it could finish at around 1.2% GDP growth and still quite high inflation rate of 8.5%. If we look at the Virsi situation, and you saw in the previous slides, in general terms, there has been growth in all segments and the situation is quite strong. But looking at the financial debt, we see that, for instance, turnover rose by 5%. But as a fueling station and network, we are quite correlating with the fuel price change. And if you look at the retail segment and fuel prices in the first 6 months of 2023 compared to 2022, there has been actually the price drop of 11.1% thus turnover rate is not quite indicative in this situation it's rather gross profit that we present, and there has been growth of 10%. Mainly this drop has been generated by 2 segments, which is Convenience Stores and Energy sector. But the Fueling part of the business has been quite a big run in the last year's first 6 months due to the changes in geopolitics, there has been a big increase in the band and high peaks in the profits. And this year has been more back to the normal situation. If we look at the rest of the cost that has been increased, and we will analyze it later in this presentation, but we are happy actually about the EBITDA. EBITDA ratio in Virsi because there has been growth of 14.5% and we have reached EUR 7.6 million in the first 6 months and compared to last year, EUR 6.6 million. There has been quite systematic work from the gross profit side and also controlling the cost because cost side has been affected a lot by the inflation that was running high, especially in the last part of the year of 2022 and is affecting the ratio still this year. If we look at these ROE. I would suggest you looking at the ROE adjusted here, and you see that it's still remaining in the level of 2022. There has been an effect to the net profits from the derivatives we are having in our asset portfolio. We can say that if you remember the third slide of the presentation, where Janis was discussing the electricity market dynamics than taking into account that we are having still quite the same portfolio of the assets from the derivatives of the electricity, the price changes that had the experienced market last year. In the first 6 months, where we needed to recognize the increase in the asset value of EUR 1.5 million than a bit running down towards the year-end and dropping a lot this year when we need to recognize minus of EUR 1.3 million in the value. All in all, we can still admit that our price instrument is still quite below the actual market price and it's competitive and it's still offset with the plus sign but this roller coaster with the pricing in the past period has been affecting our profit and loss ratios for this period. But if you look at the clean net profit result from the core business activities, then we see that there is a bit below 10% increase and reaching EUR 4.4 million in 2023 compared to EUR 4.1 million in 2021. And we could extend the graphics back to the past period and also prolong it to our financial plan to 2026, you'd see that this is still around up in the mountain. And we see that there's a quite challenging periods in front of us in respect to the high target set. If we're looking at our balance sheet and cash flow balancing ratios, then we still have a quite low net debt-EBITDA ratio of 1 at the end of June of 2023. And that's -- let's say, below in an average, but it's a very good position compared to what we are expecting in front of us. Previously, we stated we plan to have 80 stations in 2024. We have not changed this target also at this point of time. So we know that by end of the next year, we need to build up a bit less than 10 stations and that is quite expensive and massive period in front of us. So we are in a strong position to take on new liabilities and have more capital spending in the next period. So let's look at the net profit bridge. And if you look at the net profit. Here, we see the absolute numbers for the 2022 and 2023. We started this bridge with the 2022 when we had EUR 5.6 million in our profit. Clean net profit without the financial derivatives would be EUR 4.1 million and then we see how we are affected by our results. We know that in gross profit, we made 10% more than in previous year's comparable period. And we know that the big bunch of this came from the convenience stores and also from Energetics. As you saw from Janis presentation, we are having more than 50% of these segments in our portfolio. Last year, with the market situation, actually, we were quite below and finished the year with a 44% in these 2 segments. But we were quite affected by the inflation in labor market and also in the rest of the cost. And if we look at the selling costs that is increase of around EUR 0.5 million and most of this increase comes from the labor costs that increased year-to-year by 15%. There was also an increase in rest of the cost to operate the infrastructure. And altogether, we still managed to make EBITDA of almost EUR 1 million more than in the past year's first 6 months or an increase by 14.5%. If we look at the rest of the position we know that our network is still expanding and depreciation is growing, and that's I'd say, it's controllable and understandable, and we can cope with these expenses, but that has been also the position and the interest income and expenses where it has been an increase more of the cost control because still in 2022 in the first half of the year, Euribor, has been negative. Thus, we only had our fixed margin on our loan portfolio. But since 2022, middle July and up until now when in this August Euribor is reaching almost 4%. The interest rates are still running high. The inflation is still running high. And in this year, our interest expenses has doubled. We're trying to manage these expenses by overnight deposits and like very conservative management of the loan portfolio. And also this year by now, we have not still taken any more loans and it's just the payback of the old loans and management on our operating cash flow. But yes, that's the position, that is -- we're still looking forward for the Euribor to drop, but it's we can manage them, but it's not a pleasant situation as it's out of our control. In the bottom line, if you look at the adjusted net profits, we have grown by almost 10% or [ EUR 385,000 ]. And this has been a very strong increase compared to what's happening in the market. And we are looking at this 6 months period, is a challenging period, but with high results, and they are much higher than we actually budgeted in our management estimates. And then we see this unpleasant minus that is driving our net profit in absolute value is lower but as I explained already before, that's just the net result of what was happening in the markets and in the energy sector last year compared to what whether it's now. And although we are experiencing this high peak and a drop in this year, it's still with a positive sign because the agreements we have been signing in the past years gives us confidence and a good price for the next period to come until 2027. So that is what it is. And also the shareholders from the last year experienced this increase in the profit and the dividends that draw also the corporate income tax a bit higher from the dividend distributed but in general terms, the situation is stable. It also helps us to manage and control our cash flow situation with our financial instrument we are having right now and the net profit for the period have been quite high and pleasant for us as the management.

Okay. Thank you. So before we jump to questions, let us look at strategic goals. I might remind you that when we launched IPO, we had a strategic long-term goals up until 2024. And obviously, because '24 is already next year, so we needed to refresh and revise our goals for a longer period, which is '26 and what we see is that there are concrete targets, which we want to achieve in '26 including EBITDA, also net profit. So basically, we see that this development of organizations profitability is expected to still be very significant, especially if you exclude these one-offs from this financial instrument. And the way how we will do it is we will continue to strongly develop our service station network. We see that an optimal number, which we would have to reach by '26 is around 90 stations. Currently, we have 72. So we need to open at least 5 to 6 stations per year. And we see that next year, we will actually -- we might open even more. So next year, we'll be very, let's say, critical in terms of expansion where we will be opening new stations in very strong places which should result obviously in even higher market shares for our segments. And then we are continuing to develop our alternative fuels. So again, currently, we are already #1 in alternative fuel because we are offering CNG product, which is nobody else able to do in the market. And that's obviously besides the [indiscernible] which we are already offering. But the next couple of years, we will be still working on LNG, on biomethane and potentially also on hydrogen so that by '26, we have quite a big range of alternative fuels to offer to our customers in, let's say, ESG when we will. And then obviously, Vita mentioned this business diversification and in particular, with gross profit. What are the sources from which this will be coming, we see that this dependency on fuel segment will be becoming even less in a couple of years. So we estimate that more than 55% of our gross profit should come from nonfuel segments, which is completely in line with our overall strategy to become less dependent on the Fuel segment. And none of this, obviously mentioned above, would be possible without top talent in our organization. So we will continue to work hard on becoming even more, even stronger employer to our employees so that we are able to attract the top talent from the market and also to develop existing one. And therefore, we are continuing to keep our goal to become top 10 employer in the Latvian market by 2026. And just a reminder, in 2022, we were in top 40. So still a way to go, but not something which would be impossible to do. So that's it from the presentation.

Thank you. Let's now continue with the Q&A. The questions keep coming in already. Please use the Q&A window should you like to join our discussion today. First question that we have received what is revenue growth in comparable stations, excluding those added during past trailing 12 months versus last year.

That's actually from our, let's say, limited information side, we're not providing such an information. You could have some comparison to the information we are giving in the management report about the stations that are incoming and have some understanding on the average growth. We can say for sure that we are looking forward that the old stations as well as the new stations and putting some investments there to have always this positive growth on both sections, new ones sometimes growing not as fast as expected or even faster than expected and that's quite, I'd say, a lottery what will be the result. But looking at the old stations, it's always a stable growth and we watch out that the -- all the investments made are paying up there.

Are there plans to increase the shareholders' discount for later discounts in the foreseeable future?

We actually already increased this year slightly the discount. And we think currently the software for our shareholders is very competitive because, again, you can receive the discount not only in weekends, but also on each working day. And on top of that, you can also have quite significant discounts in our Convenience stores and products. So therefore, no answer is currently, we are not expecting to revise this.

Thank you. We talked about sustainability earlier in the presentation. And here comes a follow-up question. Do you track and if yes, how the sustainability of your partners in both convenience stores and fueling stations?

I said that's quite a struggle in the market and not for us, but for everybody, with the new regulations. This framework is still costing up, but it should come in the near future. Right now, in our sustainability team that Janis has presented already before, we are working to understand what is the best fit and what is the best ratio to track on our suppliers. So right now, it's more of a case-by-case analysis.

What are the plans in regards to opening new fuel stations?

Here, we are, I guess, already indicated it somewhat in a long-term strategy. So we need to have around 90 stations by 2026. Currently, we have 72. So which means that around 5 to 6 stations per year, we will definitely open and as I mentioned, the next year will be one of the most crucial ones because we have long work on several, very strong projects, which we needed to have all the permits and so on. And finally, they are ready. So next year, it will be quite exciting in this area, at least.

Do you have plans to organize secondary public offering and increased street load of the shares and [indiscernible] in the near future?

And the short answer is no. Not in the near future. As right now, we see the sufficient balance of the internal management financing and the extent now.

Do you plan to offer electricity for households only in Latvia or also outside Latvia?

Honestly, obviously, the first milestone is Latvia market, which we launched, as I mentioned by end of September. Let me be honest. We have not currently thought about other foreign markets. Of course, we have some ambition within the team. I guess, the first homework is to become an [indiscernible] of our strategic goals in Latvian market. And then in let's say, 2 to 3 years' time, we might think about some other markets.

Yesterday, you released an update for the long-term development plan. Can you summarize this and the expected reduced profitability in the short term?

Yes, I can take this one maybe. So, yes, if we compare 2024 previous goals with current 2024 goals there is some slight drop, very slightly in EBITDA and a bit more significant in net profit for '24, but the reason is, obviously, the fact that, I guess, 2 reasons. First reason is that obviously, we have this inflation coming all around and putting pressure on wages, on interest rates and so on, which is obviously making this market a bit tougher in terms of salaries and financing costs. And then the second reason, maybe even more important is that we are actually accelerating our investing long-term investment plans in next couple of years quite significantly because in order to develop around 20 stations, it's a huge amount of investment needed. And we see that, obviously, initially, once you build those stations, there will be some time when they kind of kick off. So you obviously have some amortization costs in the P&L and therefore, there will be a bit, let's say, more time needed so that those stations are giving our profits and EBITDA as the numbers. So yes, that's what we can tell about that, but it does not, let's say, change the overall big goals for longer term. We still want to become, and we will become #1 in all the segments. So a bit more patience needed here.

All right. And continuing on this topic on the same topic regarding the long-term development plan, how do you expect to finance the expansion of the network, meaning what do you see as the need for additional external financing compared to current situation?

It's quite short answer. Looking at this net debt-to-EBITDA ratio, we have a capacity, and we have a plan to finance it from the bank loans.

And a follow-up question regarding the financing. Would you consider a bond issue or purely bank financing?

Yes, we have discussed in time with this topic actually quite expensive some time ago. And we have reached a conclusion that there are more advantages to bank financing than bond financing, especially obviously the interest rates and so on. And therefore, we are not planning to do bond issue in future.

Thank you. We have answered all the questions. I will remind that the recording of the webinar will soon be available online, therefore follow Virsi announcement. Thank you for your time today.

Thank you.

Thank you.