KRUK Spólka Akcyjna (KRU) Earnings Call Transcript & Summary

Hello, and welcome to today's KRUK Full Year 2021 Results Conference Call. My name is Anil, and I'll be coordinating your call today. [Operator Instructions] I would now like to hand over to our host, Marta Wasilewska from WOOD & Company. Please go ahead when you're ready.

Good morning, and good afternoon, everybody. Thank you for finding the time to join KRUK's annual results call today. I have the privilege to represent the host of today's call within the company. And now without any further delay, let me hand over to CFO of KRUK, Michal Zasepa. Michal, the floor is yours.

Marta, thank you very much. Good morning, good afternoon. Thank you very much for taking time to listen to this results discussion, I hope, not only presentation. I'll be using the presentation available on our website, and I'll be pointing to the slides I'm referring to. Well, it's a pleasure to have this call because this is -- these are the best results KRUK Group has ever had. And not only that they are 2x better than our, so far, record net profit of over PLN 300 million that we achieved back -- 3 years ago in 2019. So it's a great pleasure to tell you the details of what has happened in Q4 and a great pleasure to present to you something which I think is a very solid result on multiple markets with a business that still has potential to continue to grow. This is a breakthrough year, I think, for KRUK. We proved to ourselves we are an international business. We are able to succeed in -- all over Europe and that we are able to systematically improve our effectiveness, which results in significant improvement in margins, market shares and net profit, also on our core markets in Poland. This result is one thing. The other thing is the transformation we're going through. So on conference meeting with Polish investors [indiscernible], I want you to remember 2 things, please. First, this is the results, which is very solid. But second, KRUK is going through a digital transformation in a process in which we are improving our ability to contact and collect through electronic means, in which we are able to transform into more digital, more automatized company, which more and more uses sophisticated data processing for decision-making. And this is a process. And 2021, '22 is just an important step -- next step in that process, which hopefully, will lead us to having even better market position and being able to accelerate cash flow, achieve better net cash flow with less cost on the cases that we are buying. Now going back to Slide #3. You see this almost PLN 700 million of net profit and over PLN 1.5 billion of net EBITDA, record high recoveries of PLN 2.2 billion and significant investments of PLN 1.7 billion, which, of course, bode well for future years. This means a very nice increase of earnings per share, and they are at PLN 36 this year. Over 30% of that we want to pay out in dividend in the coming months. That means return on equity of 27%, possibly one of the highest in the industry, which we are able to achieve at a relatively modest indebtedness level, 1.7x cash EBITDA. The business grew by close to 30%. If you look at the balance sheet, the value of our portfolio is now worth PLN 5 billion. Now recoveries are, of course, the single most important measure in our business, and I'm pleased to tell you they were -- they continued to be very strong across all countries in unsecured consumer business, which is a good 75% of our business in all geographies. They were a few percent better than we expect at budgeting -- in the budgeting process. And we see that this trend is undisturbed as of May 16, and the results -- the recovery results for Q1 seems to be very good. New portfolio purchases, more details soon. But this is 2 very important news. First, in the market, which is our core market in Poland, we proved we can put to work much more money than so far before and invested over PLN 1 billion just in Poland. And that commands a market share of 50% and is the result of improving effectiveness of our processes, which translate to more competitive pricing of the new books. And that's a very good news. Of course, with over 50% of the market share in 2021, we have definitely a lot of competitors unhappy with the unrealized investment plans. And the competition is strong, and it continues to be strong in 2022. The second important news is that we're back on buying portfolios on meaningful scale in Italy and Spain, having proved to ourselves that we can do profitable business there. And at the bottom of the slide, you see the estimate of the returns of the purchase of these new books. They are, in my view, fine, 22% gross return, 2x money expected on all of the investments we made in 2021. I'll now jump to Slide #6. We are well-funded. Leverage level is one of the lowest in the industry. We are well-funded, taking advantage of very good reputation of the Polish capital market, where we successfully placed bonds this year before Ukraine conflict -- before Russian invasion of Ukraine. And we placed successfully over PLN 400 million of bonds. So in a sense, we were lucky. The market now is more difficult, but I would expect it will go back to some balance, to some normality in several weeks. And in the -- on the other side, we are talking to our partners, the international and Polish banks in Poland about extending the lines and enlarging the lines of funding. So we are prepared to continue to invest significant amount of money in portfolios in 2022. We have made a recommendation to the shareholders to pay PLN 13 per share of dividend. And we will wait for shareholders' decision at the shareholders' meeting to be announced soon. And last but not least, we are all shocked in KRUK with the invasion of Russian regime on Ukraine. We're very unhappy about what's going on in our -- at our Eastern border country. We are very moved with the humanitarian crisis that this invasion resulted in. We are helping, as a company, to refugees. There is a budget of over EUR 300,000 that we will spend on humanitarian aid in Poland, Romania and Slovakia, the 3 countries that border with Ukraine and see the inflow of migrants. And I'm sure many of our employees is individually involved in helping in some way to millions of Ukrainian people, mostly men and women who look for shelter now in Poland, Romania or Slovakia. We are not involved in business in Ukraine or Russia. We had no assets there, so we're not directly affected by that. Any effect on our business would be indirect effect on the macro environment in Poland. As we wrote in the report, there is no sign of such indirect impact at this point. Will there be an impact? I don't know. Maybe, but that would mean that we would see significant loss of jobs for some reason in Poland, Romania, Slovakia, impoverishing our home budgets, decreasing our home budgets, the money we have for the daily spend. That, of course, is a possible scenario, but I don't think it's the base case scenario for now. So we are, of course, watching the situation. We'll be making -- carrying out some sensitivity tests. But my view is that we are fundamentally strong, and there won't be a very significant effect on us, of course, depending on the scenario we draw from this conflict. I'm talking about the scenario of this conflict not containing any major countries in which we operate. And Slide 7 gives you more details about some of the achievements and some of the steps we are making in the area of operational excellence and technology development. This is very important to us. This gives us meaningful savings and gains and -- that we already observed. So this is something we want to draw your attention to and tell you, KRUK you knew from a few years ago is not the KRUK you see now. It's a much more advanced and a technological company with a more focus on that and more promise that future gains will come from that. Those future gains will be we do things faster. We are able to bring cash sooner. We are doing it more cost effectively. And we make better decisions using the data we have about the debtors and the clients, how to manage the process. Now on Slide #9, you see our results by segment. Once more, it's very reassuring for me to see a very good turnaround in Italy and Spain and positive results. There are great development of profitability in Poland, excellent results in Romania and also super results in Slovakia, Czech Republic and on our small German assets. All of those business lines have been very nicely profitable. And this was the best year for most of our countries. Slide #10. Polish market was back to levels of activities we saw pre-COVID, in pre-COVID times. The value of -- nominal value of debt sold to consumer and mortgage portfolios was close to PLN 9 billion, PLN 1.8 billion of investments, of which KRUK took about 52%. Now if you look at the results in Poland, they were very good, PLN 1.1 billion of investment. It's something we do not expect to be able to repeat this year. We probably will invest several hundred millions of zlotys but shy of PLN 1 billion, maybe PLN 700 million, maybe PLN 800 million, maybe something within this range because we expect very high competition and because we expect somewhat smaller supply this year. However, it depends on the scenario, about macro, because if we are talking about the scenario of high interest rates and somewhat worse macroeconomic outlook, lower GDP growth, maybe the clients with bank credit will be under more pressure. Maybe we'll see the increase in defaults with banks, and that may result in increase of the market for NPL but probably not in 2022 yet. If you look at Romania, the market also bounced back nicely to PLN 1.5 billion, about PLN 300 million of investments, of which KRUK took about 60%. We expect the market to be in similar -- about similar levels, maybe somewhat higher in 2022. If you look at the results, they were a little excellent. We managed to place eventually about PLN 170 million. You may remember the beginning of 2021, that was a slow beginning. Overall, we're very pleased with this amount of money invested. In 2022, we had a more ambitious budget for investments, which is supported by one significant forward flow agreement secured already last year that would bring us additional investments. And of course, there will be a number of new portfolios to be bought. Then Italy, you see very large market potentially, PLN 55 billion, but all of that is accessible to us. Some of that is mixed portfolios, big portfolios for us. But there is quite a few good opportunities for us to continue to explore the niche of banking and nonbanking consumer finance. And we will be focused on that. We quite successfully invested close to PLN 300 million on this market in 2021. And 2022 looks very good in terms of potential to invest because we secured also a significant forward flow agreement, and we see a strong pipeline of portfolios coming in the next several months. So maybe we are able to invest similar amount of money in 2022, maybe we can even do better or significantly better than what you saw in 2021. The performance is solid, a huge improvement over last year. If I look at recovery curves for Italy, it's an undisturbed positive trend of beating our expectations for the past couple of quarters. We definitely are now in the area of risk on the upside. The possibility of future positive revaluation is definitely higher and reverse the risk of negative revaluation. That, of course, is also true for Poland and Romania on a larger scale. And [indiscernible] Spain. On Slide 16, you see markets of about PLN 13 billion, nominal EUR 1.2 billion in terms of investment value in Polish zloty, of which we had a small portion, 8%. So again, a good possibility to be bigger in Spain. If you look at the market, we successfully invested in a few portfolios placing PLN 130 million. That's Slide 17. Also, you see significant improvement on results. But here, 2021 was very good performance on our unsecured consumer credit books and still unsatisfactory results on the small portion of business, which is corporate unsecured debt. Fortunately, the value of the second part of the assets is relatively small. And most -- all of our new investments is coming into the consumer. That will be also our focus in 2022. So also, there is more risk on the upside than on the downside in Spain, although it's probably less secure situation, less comfortable situation than we have in Italy. But it's improving, and the prospects of growing that business are quite good. And the other markets, which is mostly Czech Republic and Slovakia, had some great performance. You can see profitability measure of 45% here is as good as it was for Romania. Very good recoveries resulting in significant revaluation, positive revaluation as of the value of the assets on that market. Decent amount of investments, of course, in the smallest market, but it is the best year for that business in our history, too. Then you have Wonga, which doubled its EBITDA but did not grow the revenues. There were a few important events in Wonga. One positive, we were able -- watching closely the decisions of the Polish Antimonopoly Office, we were able to release a significant part of the provision for so-called earlier repayment of provision in the linear methodology. For those of you who this is unclear, please contact IR, we'll explain it to you. It's a legislation change that happened in Poland a few years ago, for which we created a provision. And now we are releasing and looking at this concrete stance and decisions of the Polish Antimonopoly Office, which enforced this law. And that's positive. That's an extra gain, which reduced our costs, if you look at the P&L. But there is also a negative. Wonga needed to create additional reserve provision in -- for its revenues and the situation in which Wonga expanded its sales, and many of its clients are repaying the debt earlier under this legislation enforced by the Polish Antimonopoly Office means that people who took a loan in Wonga for, let's say, a year but repaid it after 3 months, paid very low price because they get most of the money back when they prepay. And that meant that the new accounting model that we're also introducing Wonga at the end of the year showed us the necessity to create this additional provision. Both situations are really related to the same phenomenon, which is this earlier repayment of credit. Overall, that means Wonga has lower profitability than we assessed a few quarters ago. It needs to increase the cost of its loans, which it has been doing. The company has been doing it for the past few months. We have quite good results off that. So the situation as for now, it's stable. We are profitable. But in Wonga, we need to also be aware of the fact that there is a piece of legislation, so-called anti-usury law proposed a few months ago by the Polish Ministry of Justice, which is today waiting to be discussed by the parliament. And it proposes a very tight, very significant decrease of maximum cost of credit, noninterest cost of credit. That means very bad news for most of the industry and significant bad news for Wonga, for which the company is preparing for this change of law, but it will mean significant lower profits. However, we don't know when this new law will be passed and what exactly the terms of this new law will be because it is a very negative news for all the industry, including Polish banks. So we are not sure how realistic it is that this law will be passed. So we live with this uncertainty at Wonga, unfortunately, but there is nothing much we can do about it. The good information for KRUK shareholders, Wonga's share in our assets or profits is much lower than it used to be a year ago, 2 years ago. So whatever it means to Wonga, it will not be so significant, most likely for KRUK Group as a whole. Hopefully, the situation is resolved in some positive way, the new law comes and is passed, but it's not as draconian as the first draft and Wonga enjoys less competition, maybe somewhat lower scale, but still weakened profitability. But the outcome is uncertain at this point. And the summary of results, Slide 22, very high profitability. If you look at KRUK business today, the scale of it, net profit of close to PLN 700 million, EBITDA of PLN 900 million, this is already one of the largest businesses in this industry in Europe, with probably one of the highest profitabilities and, I think, very good risk profile, low in that business. Our strategy for this year is to continue the path we followed in 2021, maximize the value of NPL investments across all of our geographies. The guidance I can give you is looking at, for example, at Marta's report and her assumptions, we will be able to continue to invest at PLN 1.5 billion a year. I think it's a good target for us for 2022. We have an ambition of growing net profit this year versus last year. We had a budget which assumes that. Of course, it is more difficult today to achieve that than it was a few weeks ago because the interest rates have risen significantly in Poland. Possibly, we will have more or about PLN 30 million, 3-0, of more financial cost this year than we budgeted for. But our goal will be to compensate it with higher recoveries, higher effectiveness, maybe more better investments and still meet the target that we have for the net profit. So we're absolutely not giving up. We see potential for that business to continue to grow given that we are already at a relatively high base. In this presentation, for the first time, you also have a number of new disclosures, vintage analysis of the profitability or results -- cash results of the investment in portfolios in the historical years between 2004 until 2021. Please analyze and draw your conclusion. My conclusion is you see that overall, this business is highly profitable, that this profitability significantly increased over time. What you see as results today was far -- is far better than what we anticipated several years ago. And you also see that there's a high degree of diversification. It's not one or second or another year that brought us those results. This is investments in hundreds of debt portfolios across the past 15 years, which I think gives us a very good credibility as a stable business. Thank you for listening to the summary, and I will be very happy now to take your questions.

[Operator Instructions]

While we are waiting for questions, can I start? It's Marta from WOOD.

Please go ahead.

Okay. So maybe I'll start from the big philosophical question because you suggested in the press comments earlier today that your ambition is to deliver PLN 1 billion of profit in the next several years. Without -- like what do you consider to be the key driver for KRUK as a company to be able to deliver PLN 1 billion of profits like on a more sustainable basis, not on the basis of some super, extra, hyper, strong, exceptional year? What does it take? Does it take entry to the new country? Or does it take a complete turnaround in some of your geographies? How do you want to achieve that?

Well, this PLN 1 billion, it's a KRUK's group target. It is treated as this. It's not operationally now within the plan, definitely not for this year, maybe not for the following year either. But having said that, it is possible to draw a scenario like that for KRUK in the coming -- in the markets in which we are. But for that, we need to increase the scale. So the easiest way to imagine that and to write this scenario in numbers would be to increase the scale by -- of our portfolios, of our bank book significantly so that with similar or somewhat lower profitability than you say -- see now, we would be able to achieve this PLN 1 billion. So we would be -- I don't have this scenario in front of me, but that would probably be a scenario where we invest closer to PLN 2 billion a year, not PLN 1.5 billion a year, that would give us similar results to PLN 1 billion. And if you look at the markets, if we would be able to sustain investments, say, PLN 700 million annually in Poland, PLN 250 million in Romania, PLN 15 million in Czech Republic and Slovakia, that totals PLN 1 billion. And add another PLN 1 billion annually from Italy and Spain together, then that [ adds up ].

Okay. So it's mostly the scale and PLN 2 billion of annual investments should be enough?

Yes, that's the easiest way to imagine that. Of course, we could talk some efficiencies, but then we could talk, okay, but maybe with bigger scale, we need to give up some margin because of higher competitive pressure. Then we have cost of funding, which is now on the rise. So it's taking away some of the profit. So the biggest sensitivity is really on how much we invest and, of course, then what are the efficiencies. [ We need that ] in terms of recoveries.

Okay. And another question referring to the comments that you've made to 2022 budget. Can you share with us what kind of benchmark like -- or either what kind of cost of financing increase you've been expecting so far? And maybe on a different note, if you could actually tell us what is the potential increase of cost of financing that you see with the current state of market interest rates that we've seen so far on your current -- like where the cost of financing is going to go?

Yes. So one point of reference is that when I -- I told you that we will be -- we will exceed the budgeted cost of finance. Now we budgeted 2.7% of 3-month LIBOR in the Warsaw interbank rate in our budget from January 2022. Now this is underestimated. Every additional point, percentage point of increase, let's say, if it was on average 3.7 or 4.7, each point gives us -- will give us roughly about PLN 15 million to PLN 17 million of additional cost when I'm looking at the Polish zloty-denominated debt on our balance sheet, which is not hedged by IRS contract. And I take some assumptions about how much money we will invest and how much money of the new debt I will draw. So roughly, that would be PLN 1.5 billion, PLN 1.7 billion of Polish zloty debt. So from that point of view, I'm saying, okay, if on average the interest rates will be in Poland, 4.7%, which means by the end of the year, they may be 5.56%, then it probably means for us about PLN 30 million, PLN 30-something million of additional nonbudgeted financial costs, which we will need to find a way to compensate likely on higher efficiencies coming from debt purchased line.

Fair enough. And Wonga, this one-off provision creation and releases, what was the net impact? What would be the revenues...

The net -- yes. Well, the impact of those 2 events is roughly PLN 3 million plus. But this creation of provision on the revenue level is something that will continue in 2022 because it just shows a different, somewhat lower profitability level. However, the company, knowing that, that is going to happen, has significantly modified its product mix and also increased prices. So this effect will be mitigated this year by higher prices and also some cost-cutting that the company has planned.

Okay. So this model change wasn't really only a one-off? It is just a structurally higher cost of risk?

Yes. Yes.

And the fact that Wonga books like, let's say, half of revenues on a segment basis, as you show it, actually, 30% of it can be assigned to [ Wonga ], yes?

Please repeat, 30% of what?

No, no. It was PLN 3 million of provisions positive net impact, yes? So net-net was positive. So basically, you really have faced a major slowdown in repayments and higher cost of risk on lending activity, yes, if I understand it correctly?

Yes, yes, yes. And it's coming -- please remember, it's not coming from larger default rates. So no, people are not repaying -- not defaulting on Wonga's loans more than we thought, but they are repaying the credit earlier. And the current legislation in Poland says that if they repay early, this credit is...

So those are not defaults. So this is basically small, [ sure ]...

Those are not defaults.

Okay. So this is small, [ sure ] reimbursement.

Yes. Well, it really goes into the fact that Wonga's revenues are smaller because a big percentage of Wonga's customers are prepaying the credit. And this is more costly. In a sense it's generating much less revenues than Wonga forecasted, historically, and they needed to change these assumptions accordingly to the reality and also follow with price increases now.

Thank you for this clarification. I have misunderstood your earlier comments.

Yes. It's a little complex. So sorry.

We have a question on the phone line from Radim Kramule from Erste Asset Management.

I just wanted to clarify a couple of things. So you were suggesting that probably it will be much tougher for you to, let's say, maintain or, let's say, surpass the 2021 figures, right, if I understood correctly from your comments in 2022?

Yes. So what I told is we budgeted at the end of the year that we will achieve a growth of net profit, some moderate growth of net profit in 2022 versus 2021. And I want to tell you today that it will be more difficult to do it because we will have higher cost of funding because of the interest rate increases in Poland. However, I'm also saying we're not giving up on achieving this plan despite the higher cost of funding because it is possible that we will have higher recoveries or somewhat better efficiency on -- versus that. And I'm saying this because the first months of 2022 are very good. So it is a possible scenario. Nothing guaranteed, but we're not giving up on showing growth of net profit this year.

And I'd say the sensitivity, let's say, to the recoveries, one would consider the unemployment rate as a major driver for the success of -- if we start seeing, let's say, the unemployment rates picking up in the region that this should have an impact on the recoveries?

Yes. It could. It's not -- we don't have a mathematical formula or statistical formula to translate unemployment into our repayments. But definitely, there is an indirect relationship. It's a more complex relationship because unemployment will cut some of the money. But on the other hand, some of these debts are repaid by families, not only individuals. So even if one person in family loses a job, another can help him repay it. Second, it's a statistic game. So today, if we look at Poland and Romania, we're looking at very tight labor markets where salaries are increased by probably about 10% annually. Now that situation will not change overnight because there's lack of qualified people in Poland and Romania. So this is an environment that is favoring us. In addition, today, KRUK is a company who collects mostly -- maybe already about 75% of our recoveries are related to legal process, where it's not decision of the customer to repay or not -- to buy this thing or repay to KRUK, but it's a decision by the administrative system. If you have the money on your account, then the system -- the representative of the court of the bailiff will collect from your account. I'm saying that being in the legal system, being focused on collection in the legal system also gives us some more certainty that this recoveries will not stop from 1 week to the other. In addition, in the environment of increasing inflation, which is the case in Poland and Romania, relying mostly on the legal collection gives us some pushing against this inflation because when you collect through the legal system, usually, in the case, for example, in Poland, there is an administrative interest added to the debt every year, which comes from the legislation and which is indirectly linked to the level of interest rates in a given country. But yes, if you look for a sensitivity analysis on which we are mostly exposed to, it's when millions of people in Poland and Romania will have less money, and they will have less money because they will start losing jobs or the inflation will be so high that the money that they have is not enough to cover their needs.

Okay. Understood. And do you -- could you say that, let's say, this increasing interest rate environment will also impact the pricing of the portfolios and competition? Because I would assume that with higher rates, you should also require, let's say, higher returns from the purchased portfolios.

Definitely. Yes, it's a direct relationship. And I think the market will be adjusting to the fact that the cost of funding will be increasing. It will be increasing directly for Polish zloty investors because their cost of funding is related to Polish zloty interest rate. But it has also increased for foreign, euro-denominated investors because the FX risks of Polish zloty versus euro is today larger, while the Polish zloty depreciated versus euro. So yes, we already adjusted somewhat our minimum acceptable IRRs. And I'm expecting that our competitors will be doing the same. But how much, when exactly, that's a combination of individual decisions of the Boards of those competitors.

Yes. How big actually is -- let's say, because the e-commerce is, let's say, gaining market share and the company starts offering buy now, pay later, are you somehow cooperating or offering some, let's say, services to these companies? Because they should also do their kind of scoring and recoveries.

This is a potentially very interesting market. In some markets, for example, Germany, that is already a large market. But this is supported with legislation about debt collection, which allows adding collection costs to the regular invoice for unpaid product. This is relatively small. So I'm saying in some countries, like Germany, there is a very good legal framework for debt collection business. Poland for -- and Romania for that reasons are less -- offer less opportunities here. Also, the buy now, pay later is not so popular yet in Poland, Romania or Italy. So we are open for that business, both in servicing and in debt purchase. We've done some of the business, but it is relatively small. But we're looking at how quickly this business develops in Western Europe, especially in Germany. And we're thinking how we can join this train because it's a fast-going train in some countries, when we are interested to do that business, if it comes to us.

Understood. Maybe last question to legal changes that you -- I had some impression or I remember reading some news that the Polish state is again preparing some kind of changes in the debt collection market.

That is correct. And thank you for this question because it escaped me to comment in my presentation. So yes, a few weeks ago, I believe, the Polish Ministry of Justice announced that they have a plan to regulate the debt collection market in Poland, creating a more better, friendly legal environment. Now with this available in public domain, it's some 12 points from journalists' article, but no bill, no actual legislation was made public at this point. So all we can do is relate to a press article where some journalists talk to the Ministry of Justice and wrote something. Based on what this is, we say we welcome this change. It will limit competition. It will improve the position of the debtors. There is regulation proposed there to limit amount of -- number of times you can call a person a week, hours in which you can do it, you can only visit this person if you pre-agree a meeting. All of those changes are -- we are, in some way, observing through our internal industry good practices. If they are stricter but are even same for everybody, we are happy to comply. Also, this legislation calls for some necessity to be a licensed business, which is the case in many markets. Also, it calls for a necessity to license every employee who is engaged in debt collection. It's unclear what it would be, but it needs to be something practical. So we look at this, and we're not scared of that. We think in longer term, that will help the industry to not engage...

A routine lawyer -- you would see some kind of a protection...

Yes. We would see this as setting firmly rules in which you can do the debt collection. And the big players should have no problem with complying with that. And eventually, I hope that would take away some bad -- possible bad publicity for some smaller debt collectors who maybe are aggressive. So at this point, we don't think it's a major issue, but we need to see the actual legislation to get a solid opinion. Right now no lawyer can say anything because it's bullet points, not paragraphs that we can analyze.

We have no further questions. I'll now hand back to the speaker team for any final remarks.

Thank you very much for taking part in this call. The business is solid. We probably are -- we'll be having a very good start of the year in terms of recoveries. Pipeline is building up for second quarter, but already there is some meaningful investments done or secured this year. So we're looking forward to another solid year. We don't know what this conflict in Ukraine will exactly mean for our business, but we are definitely in a position to withstand any possible difficulties. Thank you. Have a good day, and hope to speak to you and meet you over this year.

This concludes today's call. We thank you for joining. You may now disconnect your lines.