Nexi S.p.A. (NEXI) Earnings Call Transcript & Summary

Good afternoon. this is the Chorus Call conference operator. Welcome and thank you for joining for the Nexi's First Half 2020 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Paolo Bertoluzzo, CEO of Nexi. Please go ahead, sir.

Thank you very much. This is Paolo. Good afternoon to all of you, and welcome to our first half 2020 results presentation and call. As usual, I'm here with Bernardo Mingrone, our CFO; and Stefania Mantegazza, who is leading our Investor Relations. We have a few other colleagues that may help us in case it's needed in the Q&A session. I anticipate that we'll have, probably, a slightly longer than usual presentation this afternoon. And the reason is that we try to give you as much as possible clarity on what is happening around the COVID situation, most importantly the recovery after the lockdown period. And the presentation will be basically split in 2 parts: this COVID update that I will be leading; and then second, obviously we'll cover the results for the first half of the year, and Bernardo will be leading that session. And then as usual, we will have our Q&A session. So let me start from the executive summary as usual on Page 3. As you probably observed, the COVID-19 health situation in Italy is currently under control. We normally have around 200, 300 -- from 100 to 300 new positives per day depending on the day, with less than 50 people still in intensive care across the country. After 2 months of very strict lockdown in Italy, where they were March and April, basically, we had a reopening phase, Phase 2, that started at the beginning of May when basically we were having our first quarter call. And then a Phase 3 started in June with a gradual return to normality. Also, international travel recently reopened with some country-specific restorations in place. And as you know, the situation is changing on a daily basis, but that is, broadly speaking, the situation. The first half of the year, transaction volumes aggregating. Acquiring and issuing has been down compared to last year, about 17%, with a gradual recovery across all components from May. In particular, the 2 areas that are still behind, although recovering, are all the travel/tourism sector, and across sectors of international travelers' contribution. We show data on this. Our acquired volumes last week rolling, and you will see again all the details here, was at around minus 9%, with a strong recovery across category over the last couple of months. In particular, acquiring volumes on the Italian cards, so net of the foreign cards are now back to pre-COVID levels. While as I said foreign cards are still behind them, we are observing, and we also give you data on this, a progressive reopening of the commercial activities with transacting merchants' levels now back to pre-COVID and 2019 levels. Obviously, as we said in the past, E-commerce saw a strong acceleration outside of travel industries during the lockdown period. It's actually continuing. The numbers we reported is about a 35% year-on-year growth for the first half of the year and a 43% year-on-year growth in second quarter, as I said, net of the travel/tourism-related sectors and restaurants. If you take E-commerce overall, it has been slightly down, minus 2.8% due to the important effects in the travel industry. And last but not least, we start to see early signals of acceleration across different sectors and industries of the structural shift from cash to digital payments that was already happening. And you start to see some signals that allow us to be thinking positive about the possibility that what is happening is creating an acceleration in the transition. Page 4, continuing the executive summary of first half year results. First of all, we just want to remind everybody that at the end of June, I would say a bit earlier than expected, we have completed the acquisition of Intesa Sanpaolo merchant book. And therefore, given the nature of that deal that was included and the fact that the full economics for 2020 would have been coming to next year regardless the date of completion, the numbers that we are reporting today are both with Intesa book contribution for the first half as well and without, to allow you to have comparisons. Starting from next time, we'll only report including Intesa book contribution. Said that EBITDA in the first half has been going down, minus 3.9% including the organic contribution of Intesa. On a stand-alone basis without that contribution, it has been actually negative 8%. On the revenue side, again including Intesa revenue, has been down 6%. While on a stand-alone basis, it was about minus 8.5%. As far as the key business updates are concerned, Merchant Service & Solutions commercial activities are now back to pre-COVID levels. I will give you a bit more details, and we think this is positive. We are launching a new proposition, in particular one is called NexiGo. I'll say a few words, a few more words later on. We are accelerating our pipeline of large merchants, omnichannel propositions. And actually, E-commerce is having a step-up in terms of gateway activations. On Cards & Digital Payments, also here the activities are gradually recovering, even if they're not yet back at the level that they were at in the past. And you have certain areas of acceleration success, for example, international debit and digital more in general. Third area of business, Digital Banking Solutions. Here, we see an accelerated interest, I would say, around Nexi Open banking ecosystem proposition and a good trend on self-banking and digital corporate banking and more advanced solutions. On the costs side, we are implementing our EUR 100 million cash cost containment plan that we announced back in May. Also thanks to that, but not only thanks to that, the costs were down for the first half of the year at around minus 9.1%. And Bernardo will give you more details, including an update on where we are in our cost containment plan. As a consequence of everything I said before, the net debt on EBITDA financial position is at 4x EBITDA, including the Intesa merchant acquiring book and cost of acquisition. You remember we raised, over time, about 1 billion to fund that acquisition. Net of that component actually would have been, despite COVID, at 2.9% on a stand-alone basis, which we believe is just confirming what we committed to you in the past in terms of trend of reduction over time of our leverage. As you know, we have suspended our financial guidance back in April, given the fact it was very difficult and it's still very difficult to have a clear view of how the recovery will continue. Nevertheless, we are starting to have clearer plans and therefore, we are keen to share with you what's our ambition. I would not call it guidance, but in any case, our current plan and ambition is, for the year, we see the possibility to come back to positive revenue growth towards the end of the year if the path of recovery continues along the current trajectory. If that happens, thanks to the cost plan that we are implementing, we have the ambition to grow EBITDA versus last year, including the organic contribution of the Intesa book. Without that contribution, we would be kind of in line with last year, with a full year EBITDA that we believe could be close to EUR 600 million, including obviously the full effect of the Intesa book acquisition. On top of this, given the fact that the CapEx will be lower this year compared to last year, we expect to have a material growth in EBITDA minus CapEx versus 2019 with and without Intesa book contribution. And again as we said last time, we confirm to have a strong cash position, which is particularly important these days. Now let me go into the update on COVID and the recovery out of COVID and what we see happening. Page 5 is simply the evolution of the same page we did present to you back in May. Here, you see in gray the curve of the current positive case. They were peaking at above 100,000 back in April, and now they are trending towards 10,000 with a gradual decrease on a daily basis. The people in intensive care, which is clearly a very, very relevant measure because it's not just counting numbers but it's also adding the concept of how weight -- how severe is the virus and the situation, the health situation. At peak, there were about 4,000 in intensive care. Now the people in intensive care across Italy are less than 50. Key dates on the right. As you remember, on the 18th of May, you had the reopening of retail businesses and restaurants with certain restrictions that in most cases are still in place. On the 3rd of June, free travel across Italian regions were allowed again. It was not possible to do it before that. And we also had the reopening to EU travelers that were incoming to Italy. On the 15th of June, travel across European frontiers was reopened, and we also had the reopening of certain entertainment activities, again with certain restrictions. At the beginning of this month in July, extra-EU travel was allowed with country-specific restrictions. And now on a daily basis, there are as -- more changes to what the various restrictions and conditions are. As a note, we said last time that the Italian government was putting in place as many other governments major support economy and society support programs. Cura Italia, Liquidita and Rilancio were the 3 big names out there. And now as we speak, the government is discussing a potential new support package for about EUR 25 billion. And as you know, Europe has approved a recovery fund for European countries. And the amount of money that should be dedicated to Italy is EUR 209 billion, which obviously creates the opportunity to invest in many different areas and relaunch many activities that is happening in this case, but most importantly, create a better future for the country in the long term. Now within this context, what has happened on volumes, let me move to Page 6. This is exactly a similar graph to what we've seen in the past. Here, you may remember our combined acquiring and issuing volumes were kind of growing at 5% to 10% or depending on the week and the month before COVID. With COVID within the lockdown, they went down to minus 50%. And when we met last time, we were already at around minus 30%, minus 35% type of things. Since then, with the reopenings happening, the trend has continued to improve. More -- most recent data suggests that we are now trailing around minus 4%, minus 5%, minus 6%, minus 3% depending on the week and depending on the various phasings and seasonality. So that is the shape of the recovery so far. As I said, there are, however, very specific underlying dynamics that we'd like to explain to you a bit better. Let me start, first of all, to show you what is happening when you separate Italian cards from international cards in acquiring here, we need to separate acquiring information to make sure that we can understand the underlying dynamics. So on Page 7, you see basically the same type of curve. So this is the weekly rolling week year-on-year growth rate for acquiring only. And keep -- the dark blue line, you see it's minus 9% last year. And here, with the lighter blue, you see what is happening for the Italian cards that as you see over the last few weeks have been coming back to breakeven positive, actually plus 6% in the last reported week. While actually the international card and, therefore, the inbound travel to Italy, tourists but also business, is still very much behind. During the lockdown, it was at minus 95%, like I believe in most other countries. As the reopenings were starting, this starts to improve. As you see slowly, very slow in the beginning, a bit more -- a bit faster in the recent weeks, but it's still at minus 60%. And this is particularly important because in this season in particular, you also have a mix effect. Because as you see below the graph, while normally on average throughout the year in acquiring, international travelers would account for about 15% of the traffic. This is obviously very different across seasons and months because during the winter, it's much closer and goes much closer to 10%. Well actually, as you get into the summer, you see for example, July, a normal July, 2019 July will be actually above 20% contribution. Therefore, there is a mix effect that in this specific moment is working against us. And obviously, as we will exit the summer and go towards the fall, it should work in our favor and so on and so forth as the underlying dynamics continue to move. So bottom line, Italians, [ in particular ], actually started to come in the positive effect, also including the contribution, the negative contribution of the travel sector, foreigners are still very much behind. Recovering slowly, but I would also say steadily. What is happening in terms of sectors? And again, here we continue to look at acquiring, Page 8. This is exactly the same page we did use last time. I know it's a complex page, but maybe now it's a bit easier because it's the second time we see it together. As a reminder, we have organized the different metric categories and grouped them in 3 [ macro ] buckets. First of all, on the left you see the basic consumption, which is basically groceries, medical retail, utilities and similar type of services. They account for 35% of our last year total volumes. Second, generic and discretionary consumption. Here, we have clothing, household and the various purchases that are more discretional. And therefore, in theory, we can also postpone them. This accounts for about 34% of our total volumes. And then last but not least, the high-impact consumption. We're grouping basically everything, it's travel or entertainment and leisure related to hotels, restaurants, travel and transport and so on and so forth, which accounts for 31%, okay? Again, there is an underlying mixed effect. We'll show you in a second the numbers by category. Although there is a mix effect because in the summer period, normally, the 31% that is a yearly number in terms of weight of the impact consumption actually goes up to 36%. And therefore again, the year -- throughout the year, there is a negative mix effect for this period that is somehow shaping our numbers. So it's going sector by sector, table on the right. Basic consumption, when we met, we said it was kind of stable, actually growing double digit throughout also the COVID period. And actually as we are exiting the COVID period, it is continuing to run, you see 13% in May and 14% in June. Over the last week, again another 14%. Interestingly enough on Italian cards, this is a plus 18%. The contribution of international travels, actually, would be important across sectors because the total is -- it's more than 20%. So also in this segment, we have some contribution from international travelers that today are not traveling to Italy yet. Again, here, basically you had a solid performance and contribution both from Physical and E-commerce. Actually, E-commerce, you see, it's running at around 40% to 50% depending on the period. Second block, generic and discretionary consumption, this is where obviously with the reopenings, we have the fastest and steepest recovery. It was down minus 77% in the peak of the lockdown. May, it was already back to 33%. Now it's back to minus 11% and minus 10% in the last week. 2% positive on Italian cards. And here, and you see, again, E-commerce actually running fairly fast. Now -- it was already running at 20%, 30%, now it's running north of that, 36% in the last week, but normally it's running around 40%. Last but not least, the high-impact consumption segment, which is obviously one that is also the most affected by tourists, by the incoming tourists from abroad. Here, this was a minus 90% basically. It was down minus 70%, minus 46%, minus 20% (sic) [ 28% ] in the last week. Actually, it's already minus 6% on Italian cards. There is another point, which I think is good news, at least, for Italians. If you take, within this segment, restaurants from Italian customers, last week, it was positive for the first time after a longer period, which is particularly appreciated, I would say. Again, here, E-commerce is also suffering, although is recovering in parallel or a bit faster than Physical. All in, Physical channels are at around minus 10%. Year-on-year, E-commerce is now back to positive as the first 2 sectors contribute and accelerate and grow very fast and the travel industry recovers. So that's about it in terms of sector dynamics. We also shared with you how the mix in between the smaller merchants and larger merchants is evolving. It's actually on Page 9. This is a question that came to us a few times from investors, so we felt it was good to provide some clarity here. If you take our portfolio of merchants on a pre-COVID basis, the mix of volumes were about half/half between large merchants and SMEs. During the lockdown, this mix went more in favor of the larger merchant. A lot of them are into large retail. And by the way, a lot of them were organizing themselves faster than the smaller merchants. So you see it lockdown, it was around 37%, the contribution from SMEs. I think the good news is that over time, the weight of the SMEs went back to the previous levels and very much in line with last year numbers as well. So it's actually around 50% or north of 50%. And actually this recovery, these dynamics apply both across Physical and E-commerce. Another topic that, for us, is very relevant is how fast the shops and the retail activities have been reopening after the lockdown. And this was also a question that we received quite often from many of you. Page 10, you have a little bit of similar [ amounts ] which you've seen before. So this is the weekly year-on-year movement compared to the same week of last year, across the 3 macro categories. And this is actually the number of merchants that are transacting compared to last year, same week last year. So here you see that the blue line, the dark blue line is actually the total, and then you see the 3 macro segments. So you see that before COVID, the total was kind of like year-over-year with some specific sector dynamics. While we were in lockdown, only about 70% of them were transacting. As we got out of lockdown, rapidly, the situation improved. And then we go up to end of May, around 14% less transacting merchants compared to last year. And then, since then, week after week, you see how we had more and more merchants transacting. And right now, we are marginally below last year level, minus 2%. Again, here, you see different dynamics by sector. In fact, the basic consumption sector is a growing number, it went very rapidly back to growth. The reason why you have more and more merchant transactions is because more and more merchants are getting to terminals, and this is actually the effect of the penetration of digital payments. Well actually, you see that the other sectors are still a bit behind. In particular, travel and tourism is at minus 8%, minus 9%, so kind of recovering 1 percentage point per month. So this is the overall picture of what we observed in terms of dynamics. So again, in a nutshell, fast, I would say also strong recovery, not yet at the levels as the total of last year. Back at the levels last year, if you exclude the contribution that is not coming as it should be from international travelers. The 2 key areas of pain, if I may say that, for the economy at the moment and also for our volumes, remain the travel and tourism and entertainment space and obviously the contribution from foreigners. Now I think there's been enormous debate across the industry around how have consumer behaviors changed, people behavior changed over this lockdown. And now what is happening in terms of propensity to use digital payments and shifting from cash to digital payments, and I think all of us have a strong perception that this is happening. I think we've seen -- we've all seen lots of market researches saying that this is happening. But the reality is that it's still very difficult, given the underlying dynamics, to have specific data that are giving a size, a number to this dynamic that is reliable enough. So let us try to give you, on Page 11, a bit more insight on what we see in terms of speed of growth. And here on the left, we picked certain categories where we've seen specific already acceleration. So these are categories that were pre-COVID, that's the gray area in the positive space or kind of flattish. Going in here with the dark blue, you see the acceleration that we are observing today. So for example, let's take one in florist and nurseries. It was growing at around 15% before COVID, now it's running at 39% year-on-year growth. And therefore, there is a doubling of the speed of growth. Or for example, electronics that were kind of flattish are now growing 20%. And furnitures are kind of doubling and so on and so forth. Here, we have selected some categories where we felt that this effect was already visible. Obviously, there are many others where, unfortunately, it's still difficult to have this clarity because the underlying consumption is still weak and is recovering. On the right, we've done, again, an attempt, an exercise to try and help you -- ourselves and obviously, you, to understand what is happening here. We took only Italian consumer cards, so trying to clean from the effect of other components such as, for example, remote working for commercial cards and obviously inbound traffic from foreigners. And we also focused on the basic consumption, generic consumption areas. And here, you see that on a total basis, the rate of growth is already around 13%, 14% with actually basic consumption running at around 20%. And this was not necessarily happening before the effects of COVID. Now here, we have more analysis that is trying to address the other more specific questions. Okay, fine, but is the penetration of digital payments growing or not? And here, we've decided not to show you data because there are too many assumptions, too many Nexi-analysis type of components here. And therefore, we really don't want to take any risk of misleading you. However, what comes out, looking at specific cases and bigger samples and so on and so forth, is that probably while in a normal situation, digital penetration was going -- was growing at kind of 1.5 to 2 percentage points per year. Probably as we speak, it's growing more or less twice the speed. It's probably around 4, 5 percentage points year-over-year. Again, we'll continue to observe this, and we'll share with you as we along what we believe is really reliable and can be fully tracked. That's about it in terms of volume updates. A quick business update on the key initiatives also in the context of the COVID situation, actually the recovery situation, so that Bernardo can then run faster as we go through results. You may remember we said that we were trying to capture as early as possible the changes of behaviors of customers and have them with the recovery. If you take all in what is happening on Merchant Services & Solutions, as I said before, we're observing commercial activities getting back to normal prequarantine levels. In particular, if you take the post-installations that we suffered, you can imagine why shops were closed. It's actually accelerating and is running faster than last year. In June, we did activate about 20% more merchants than last year. There is strong demand for solutions that allow merchants to transact from remote or in a very agile way, so for example, strong mobile POS demand for small and micro merchants. As I was suggesting before, we launched NexiGo, this is a new proposition. It's aggregating -- actually, packaging things that we already had, plus new things that is really targeting SMEs' omnichannel digitalization, providing a very light type of solution also, for example, for remote commerce and e-commerce, for example, through social commerce. So even smaller merchants, which -- who don't have technical capabilities can actually start selling across channel in a very simple way, and we've done this through a list of partnerships. As we said before, we're accelerating our large merchants' omnichannel project pipeline. There was a step-up -- and I'm sorry, it's yet to be confirmed as we go along. But we saw a step-up on E-commerce gateway activation. Basically, in the second quarter this year, we did activate twice what we did activate last year. Actually, 9x which include Pay By Link. Pay By Link is the solution we launched 3 months back to allow merchants that didn't have any commerce presence to be paid from remote because they simply send an e-mail or a text with a link. The customer clicks the link, and they can pay as if it was a normally e-commerce transaction. And finally, just continue to talk about digital and digital assets, the penetration of our Nexi Business app on enabled merchants is now about 50%, with actually a 60% growth in active users in June versus June last year. On Cards & Digital Payments, as I said, commercial activities are recovering fast, but not yet at the same level of last year. Renewed interest in International Debit as an e-commerce mass market product. At the same time, we are supporting National Debit, Bancomat. That is a very strategic product also for us to develop more digital and e-commerce ready capabilities while we're participating to the next-generation platform tender that is ongoing. We see strong demand for our commercial and corporate payment products. YAP is continuing to grow on a more organic basis, and of course, lower because at the moment we're not pushing in big marketing efforts. And we see an acceleration of our digital onboarding and digital issuing projects. And last but not least, as you may read also yesterday from the press, we are working to extend the no-PIN contactless limits also in Italy from EUR 25 to EUR 50. This is something that will go over time into place, starting probably by the beginning of next year because there is a technical rollout. There are certain issues to be addressed. We can do that across both the acquiring side of the business and the issuing side, not just from us but also from everybody else in the market and, in particular, the banks. Last but not least before I leave the floor to Bernardo for results, as a reminder, on Page 13, we closed the merchant -- the Intesa merchant book acquisition successfully at the end of second quarter on the 30th of June despite the COVID emergency. We were given a full, clean European antitrust approval. Actually, the commentary around the market test that was done was actually very encouraging both in terms of the competitive dynamics in the -- for -- the outlook for more of this type of deals. As a reminder, we're talking about 180,000 merchants who transact about EUR 68 billion per year in 2019. As a reminder, again, we bought the asset for about EUR 1 billion plus a potential earnout in 2025. And together with this, we have a marketing and distribution agreement plus the extension of all the other contracts we had in issuing and other areas with them, with Intesa until 2044. As a reminder, the economics of this book are into next year count -- will be into next year count from the 1st of January this year. The size of this is about EUR 60 million in cash flow contribution generated by the acquiring book in the first half and transferred to Nexi. Key financials, about EUR 100 million of revenues, EUR 95 million of EBITDA, net income of about EUR 60 million. And again, here on the right as a reminder again, you see that thanks to this deal, the share of business that we have in Merchant Services & Solutions goes up to more than 50%. And within Merchant Services, by now about 50% of what we do is through the referral or direct acquiring business model, while we continue to develop business with the other banks in the other business models that, obviously, continue to execute in parallel. With this, I will leave the floor to Bernardo, who will take us through results.

Thanks, Paolo. I'm on Slide 15 now. So we start with the slide you've already seen, and it helps understand the dynamics or what drives the revenues in our business and the costs in our business. I think once you understand the structure of our revenues and our costs and have all the parameters, it's easy to predict or to rationalize the performance. So we start by reminding you that half of our revenues, or just over half of our revenues, grow but are not driven by volume growth. They're driven by the growth in the installed base. And this is clearly less affected by COVID, or has been less affected by COVID in the recent months. And that approximately close to 40% of our cost base is actually comprised of variable costs, 20% of which, or half of these variable costs base, is actually absorbing part of the lost revenues by falling in size, thanks to the fall in volume growth. Within the various businesses, we have a slightly different mix of installed base and volume-driven revenues. It helps us understand why the different business units perform differently. Merchant Services & Solutions has the largest portion of volume-driven revenue, 64%, and then 1/3 is installed-base driven. This ratio is inverted in Cards & Digital Payments, where you have approximately 60% of revenues driven by the installed base and 40% driven by volumes. And Digital Banking Solutions is almost entirely reliant upon installed-base revenues. So with that said, I would move to Slide 16, where just a word of warning, as Paolo has mentioned, when we agreed to purchase the merchant book from Intesa back in November last year or December when we announced, we agreed that we at Nexi would take the full benefit or the underperformance of the book from the 1st of January, even though we closed the transaction and knew we would close the transaction after the 1st of January. In actual fact, it closed on the 30th of June. So we have the full economic benefit as of the 30th of June as if we had owned the business on the 1st of January. And so we're representing our performance for the year-to-date, and we'll do so going forward for the full year 2020 on a pro forma basis. We've given you also the breakdown of what performance would have been like without the book. But as we have the economics of the book from the 1st of January, we believe it's the right way to look at our business and it helps you better monitor performance also going forward. So starting with revenues, you can see how revenues in the quarter declined 13%, worse than what we reported in the first quarter. This is due to the timing of lockdown in Italy. As you know, lockdown was progressively introduced from the beginning of March and was -- impacted us in full in April. And only halfway through May, we started to exit the lockdown. And this obviously is reflected in the volume dynamics Paolo showed you earlier, and therefore, translated into loss of revenues. For the first half, revenues were down 6.3%. So even -- they're slightly better with Intesa book than without the protection mechanisms we have in place guaranteeing a kind of floor to revenues and EBITDA from this acquisition. If we look at the EBITDA, the fall in revenue translates into a fall in EBITDA in the half of almost 4% with an EBITDA margin accretion of -- approximately 200 basis points, again primarily driven by the fact that the book we bought from Intesa has a very high EBITDA margin, being the transfer of revenues essentially with the costs already in place at Nexi through the Mercury Payments services acquisition over a few years ago. So at group level, that is the overview. If we go into the various business units, on Slide 17, we summarize the performance of Merchant Services & Solutions. I mentioned the mix in terms of installed base and volume base. So Merchant Services & Solutions is the division which is most exposed to the fall in volumes, given its highest reliance on volume-based revenues. There's also a number of other effects. We've summarized the notes here which have impacted us in Merchant Services' revenues, I would say. Obviously, in terms of volumes, we have not -- we've lost all foreign travel, most of foreign travel. It's now picking up. But in the second quarter, the travel restrictions in place basically made it such that volumes from [ extra EA ] or indeed even intra-European travel were much lower than they were last year, and that has impacted the -- this division more than the others. We have a mix effect with large customers, [ lac ] as we call them, taking -- delivering better in terms of volumes during lockdown than SMEs. From a revenues perspective, these are less profitable clients than SMEs, and this mix effect has also impacted us. However, the performance in the quarter and in the first half, I think, is absolutely consistent with the volume dynamics we discussed earlier, and the resilience attributable to the significant, albeit 40%, let's say, proportion of revenues, which is installed-base driven. We've also seen how e-commerce has performed well during the quarter. If you exclude travel and tourism, we have significant growth, which is accelerating first in a quarter-by-quarter basis and in the first half 2020 compared to 2020 -- 2019 level. On Slide 18, we see the similar analysis for Cards & Digital Payments. Here, we have no pro forma numbers, given that the merchant book were quite poor, performing based on impacts from Merchant Services & Solutions. Again, here, the installed base is compared to Merchant Services & Solutions has a high proportion of revenues derived from installed base, and therefore, this division has suffered less. We are also benefiting from the growth in E-commerce on clients that we do not act as acquirer for. Think of Netflix or Amazon, et cetera. Italian cards or cards issued by Nexi used on those platforms, you don't see those volumes in Merchant Services. We do see those volumes and earn money on Cards & Digital Payments. The year-on-year comparison is not affected by foreign travel restrictions here, although we do suffer a bit from a mix effect with Italian cards being used abroad going close to 0, similarly to foreign cards being used in Italy. All in all, however, the impact has been lower, and indeed revenues were down only 4% in the first half. And you can see also from a volumes perspective, we also suffered less in Cards & Digital Payments than in Merchant Services & Solutions as would be expected given the premises. We continue to push on products such as International Debit, which are more -- let's say, are more suited to the current environment, which sees growth in e-commerce and domestic debit, for instance. And we continue to push on commercial cards and other initiatives as we have done in previous quarters. With regards to Digital Banking Solutions, here as we mentioned earlier, this is the division which is less reliant on volume-based -- volume growth on the same terms of revenues. COVID has impacted it marginally, this division. Clearly, working on ATMs in a lockdown period has not been as easy as it should have been. And therefore, we have some decline in revenue, though very limited to this minus 2.3% in the half. We continued rolling out our initiatives on advanced ATMs, which are becoming always more relevant given the branch closures, which were affected during the first half of the year. And we've recently announced further additions and developments on the Nexi Open ecosystem with an announcement a couple of days ago of the authorization received from Bank of Italy to operate it [ VIS and AIP ]. A word on costs on Slide 20. As we had mentioned back in May, we embarked on a cost containment program. I will speak to that in a second. The benefits of this cost containment program started in April. So we have an acceleration in terms of the cost reduction compared to what you saw in the first quarter. And year-on-year, we have a 13% decline or reduction in costs that you can see here on the aggregate. We haven't broken out the Intesa book costs. I mean they're tiny. I've shown you how in the first half, the overall decline of 9% would have been 8.9% on a stand-alone basis. The cost base acquired with the merchant book is so small, and would have -- it would have created more confusion if we broke it out on this slide. However, in general, personnel costs were down 7%. This is primarily driven by variable components of cost cutting. We haven't embarked on any kind of redundancy procedures or downsizing of staff following COVID. We simply think this was a temporary impact on our business. And as volumes are picking up, as Paolo has shown you, we didn't believe we should downsize and then scale up again once volumes picked up. Whereas with regards to non-HR costs, they're down 10%. Here, we have benefited from lower processing costs, which are volume-driven, but also a number of cost containment initiatives aimed at either shifting costs through when the market picks up entirely and lockdown is completely eased, or have been simply saved to certain initiatives that are not being carried out. Slide 21 gives you a bit of an update on the EUR 100 million cost containment plan. This is a cash cost containment plan. Not all of this is P&L. Some of it is balance sheet in terms of CapEx. I think we gave you a breakdown back in the first quarter or had hinted to it. It's roughly 40% CapEx, 60% P&L. And within the P&L, it's roughly 20% volume-based, and 40% of the total coming from discretionary spending cuts including transformation costs. And we are, I think, suffice it to say, that we're pretty much on track in terms of delivering what we were expecting to deliver, what we are expecting to deliver in terms of EUR 100 million reduction year-on-year. And so we'll keep on monitoring this and giving you updates as the year progresses. Slide 22 shows you the progress on CapEx. We're slightly up compared to 2019, EUR 62 million in total. Roughly 1/3 of this is transformation spend, and 2/3 of this has been ordinary CapEx including the purchase of POS terminals. This, on the purchase of POS terminals, I think there's some dynamics in the first half which might have been counterintuitive with the lockdown. We kept on stocking up on POS terminals, afraid of the disruption that there might have been in the supply chain. But in general, as I've said, the current plan is to spend between EUR 125 million and EUR 135 million compared to EUR 170 million last year. And you can see where the cash containment or the cash savings are coming from here. None of our cost cutting or CapEx savings has been aimed at any of the transformational initiatives. And indeed on Slide 23, we have readjusted the diagram we've shown you in the past of how we expect to continue investing in our key transformation. What has happened is essentially COVID has caused the flattening of the overall curve and shifting of some of the expenses or the investments that we were going to be making this year to next year. But just to cite one example, we're investing heavily in our next-generation acquiring platform. This went almost live, where we had the first transaction a couple of weeks ago, and it's progressing as to plan. And what we've shifted out there are essentially expenses or investments on CapEx, which are -- probably would have been delayed anyway due to bank closures and the lockdown. So we're trying to be efficient in our spend without postponing structurally important investments. On Slide 24, we highlight how our transformation costs continue to fall. They were down 60%, [ '19 -- on '18 ]. They're down 60% first half this year compared to last year. And also this is clearly part of the cut -- the cost containment program I was mentioning earlier. And then we have a bridge from transformation costs to the total nonrecurring items, some of which are tied to [ damasco ], most of which are tied to [ damasco ]. That so far is the code name we've given to the acquisition of Intesa book. So EUR 17 million are related to that. EUR 6 million are costs which go to our P&L related to the IPO but are paid for by our shareholder, Mercury U.K., so they're [ it was ]. And then we have approximately EUR 9 million which is comprised of noncash costs such as LTI, but more importantly also COVID-related costs, termination payments, other one-off items, which are below EBITDA. Slide 25 bridges EBITDA to net profit, normalized net profit. I would say that the only comment I would make here is EUR 100 million normalized net profit is below what it was last year, essentially due to the lower EBITDA that we have -- that we've commented on earlier, and also the ramp-up of D&A, which is up year-on-year due to the investments we have made in our IT essentially over the last couple of years. Slide 26 speaks to the strong cash conversion we had in the first half, 77%, which is I think perfectly in line with what it was in the past. I think last time we reported it was somewhere in the same region, around 70%, 80%. We have -- even if you look further down to normalized free cash flow, once you take into account cash taxes and interest expense, cash flow generation is strong at Nexi. And this translates to Slide 27 where we can see that from a cash position, we have approximately just north of EUR 400 million of cash and cash equivalents sitting on balance sheet. Our net debt or EBITDA to net debt position has worsened, if you want, due to the Intesa acquisition. This was as expected, I would say. We stand by our targets of reaching levels similar to what we announced at the IPO by the end of this year. So this 4x leverage will be reabsorbed in the second half of the year and be much closer to what we discussed when we announced the Intesa deal. Overall, the cost of debt, notwithstanding the worsening of market conditions and the fact that we had to fund EUR 1 billion of acquisitions during -- of the acquisition of Intesa during COVID is pretty stable at just under 200 basis points, 1.9%. And it's significantly lower than where we were just over a year ago at the IPO, where we were paying close to 4% on our debt. So that's it. Paolo, I'll hand the floor back to you for your concluding remarks.

Yes. Thanks, Bernardo. The last page, Page 28 is trying to recap a little bit where we are in terms of guidance and outlook. As you know, we have basically suspended our guidance back in April, given the fact it was impossible to make projections for the year given the uncertainty. We believe that it is still difficult to make a precise prediction for the year. However, we start to have a clearer plan for the year. Again, under certain assumptions that we have to make in terms of recovery and actually dynamics of COVID, not only Italy, to be honest with you, but also as well, given the fact that one key factor, that is at the moment slowing down our recoveries, for example, the contribution of international travel. With the scenario that we have underlying right now, therefore as I've anticipated in the executive summary, we believe that there is a possibility for us to see again revenue growth towards the end of the year. Again, depending on many other things, but we believe it's realistic, it's possible. And second, given the cash containment plan that we've launched very early on in March, we believe we have an outlook of -- for the year that suggest that we may be able to grow EBITDA versus last year, including the organic contribution of Intesa book acquisition. Without that, contribution will be broadly in line with last year, which means that basically the nominal EBITDA for 2020 should get close to EUR 600 million for the year. As you understood in our current plans, we will spend a bit less than last year in terms of CapEx, which means that EBITDA minus CapEx should see a material growth. And as we said in the beginning, we confirm to have a strong cash position. I would stop there. Again, sorry for being a bit longer than expected, but we try to do our best to give you clarity on the COVID situation and also the result, with the complication that this time, for the first time, we're including also the effect of the Intesa book acquisition. So with this, I will leave the floor to your questions.

This is the Chorus Call conference operator. We will now begin the question-and-answer session. [Operator Instructions] The first question is from Moawalla, Mohammed with Goldman Sachs.

Thank you for all the additional color you provided around the volume trends. So my first question was really around those. I mean Paolo, you commented that you hope to sort of get back to some positive trajectory towards the end of the year. So essentially what's stopping you from sort of guiding it? Is it just the international and kind of tourism and travel-related segment where you've got least visibility as well as the kind of foreign cards? And I don't know if you can sort of give us a sense of the potential range of outcomes or scenarios depending on how that evolves. So can you -- my question ultimately is can you get back to positive without a kind of a meaningful recovery in that business? The second question is just around some of your merchants. Obviously, the -- right now, there's a lot of government measures in place to support various economies in Europe. What sort of provisions are you making, or have you in mind, in the event of potential sort of merchant bankruptcies increasing either the back end of the year or into next year? And how should we think of the impact to Nexi? And the last question is just on -- for the consolidation, maybe give us an update. Now that Intesa has closed, what is the scope to acquire additional books in Italy? But more importantly, any update you can give us on [ CI ], given there's been various speculation in the press, and perhaps where things stand to the extent you can comment.

Thank you for your questions. And actually, I think with your 3 questions, you're covering a large part of everybody else's questions probably. So let me take the first and the third, and I'll let Bernardo cover the one around provision and so on. Listen, our recovery, it's very difficult for us to be precise here. Obviously, we are not taking the risk to assume that all travelers, international travel to be back quickly from September, stuff like that. So at the end of the day, we are making very realistic assumptions on the recovery sector by sector. So underlying -- underneath these assumptions, we take the product categories we've seen, and we have a recovery factor for all of them and including the contribution from foreign travelers. Just to give you a perception, more specifically in the underlying assumption, we are assuming that, for example, the high-impact sector is still below last year in the fourth quarter of the year. So we are assuming that it will not -- it will have not fully recovered by the end of the year. We recover only next year. Or for example that the contribution from international travelers would be still pretty much below -- around 20%, 30% below the one that we had on the previous year. So we are assuming that the gradual trend continues, but we are not assuming that the world goes back to normal by the end of the year. So we don't need to believe that the world goes back to normal in December in order to be able to believe that our revenues will come back to growth. I hope I gave you some better insight on this. Bernardo, actually, do you want to cover the provisions now and then I go back to consolidation?

Yes. I think, in general, what we need to go back to is something we discussed back in, I think, at the time of the first quarter results. We believe that if we are impacted by -- so I honestly won't comment on the effectiveness of government initiatives. I mean a lot have been put in place. And hopefully, they will work and there won't be anything to worry about. But essentially, bankruptcies, we believe, will impact us, if at all, on the installed base. Volumes will move from one business to the other so they should be impact. Our installed base might be reduced by the fact that I know some restaurants might not open or shops might not open again in the autumn once some of the temporary support measures are removed. But that kind of impact is pretty limited. And even those shops that haven't opened yet and may not open in the future are not going to really create credit risk for us. We're not being exposed to that. We don't do acquiring for airlines. We don't have a large exposure to tour operators. Online is structurally small in Italy, which is where a lot of the risk resides. So businesses, which have been shut for a while haven't transacted, and therefore, our risk -- merchant acquiring risk, which is the fact that someone has bought or paid for something and doesn't receive the good and we are liable for that, that is minimized by the fact that a lot of shops will go bankrupt, probably haven't opened and haven't transacted, and therefore, have not created a liability for us. So we're not particularly concerned on the credit risk front. And indeed, the first half from this view, we lost -- or we provisioned approximately EUR 5 million between issuing and acquiring, half of which was a single name on issuing, which has nothing to do with COVID. So I think my concern is that if there is a deep recession, as there currently is and if this is as deep as people expect it to be, we may lose some installed base revenues. But if you look at any kind of statistic, if we have, I don't know, 10% of merchants going bust and that impacts us, we would end up losing approximately 10%, I guess, on a proportional basis of our installed base revenues and merchant acquiring. I think that is somewhere between EUR 10 million and EUR 20 million, which hopefully, over time, we'd make up anyway. So that is the extent in the kind of -- if I gave you kind of ballpark figure that so far hasn't materialized, and we hope doesn't materialize. But if it were to, on a run rate basis, that might be the impact. Clearly, not all in 2020. Sorry, it's a little bit long.

Thank you, Bernardo. Coming back on your question around consolidation. Let me start from the easiest part of it, which is your point on books. We are very happy we have completed the Intesa book acquisition. It's, for us, the fourth and, so far, the largest. As I said, the commentary from European Commission Antitrust Authority was actually suggesting that the understanding in this market is becoming more and more dynamic market in our European market as well, although the approval was given on an Italian market basis for now. And this makes us believe that there is room to do more. We believe we will have further options on the table pretty much soon. There is one that will be on the table for sure. That is the one of the portion of the UBI Banca book that will go to Intesa. As you may know, yesterday -- the day before yesterday, basically, there was a confirmation that the acquisition from Banca Intesa of UBI Banca was actually going through. In our deal with Intesa, there is a provision that allows us basically to buy the merchant books of potential further acquisition they could have done. And there was nothing like UBI on the table at that moment or at least not for us, not for what we know. But we will have the option to acquire that book at similar conditions to what we've done for the Intesa book, and obviously, that we will do. And then we know for sure that there are other banks that are thinking through what is best for their strategy and their balancing of the different needs. And every bank in it knows that we are interested. But this is something that we don't want to force. We never force because honestly, it has to really be from the strategy of the bank. If the bank is really strategically interested in making a deal happen, they know that we are very happy to participate. On the CI front, and you mentioned the articles and so on and so forth, that is -- and that remains, I think, a complex conversation. There's a conversation, I think, among our reference shareholders. As we declared in the past, as every other negotiation and discussion, there are acceleration, slowdowns and so on and so forth. It's very difficult to say at this stage where it may land. To be very clear on something that I think is clear to you, but I want to be explicit, the challenge -- the key challenge in this conversation is driven by the fact that you are looking at the possibility of combining 2 assets where one asset, which is Nexi, is a listed company with full transparency, well understood by the market and actually priced by the market. There is a price tag on Nexi. That's future, but at the end of the day, it is what it is. While on the other side, you have an asset that is privately owned, much less known, with much less disclosure and, most importantly, without a natural price tag associated to it. So it's not easy find the balance between the 2 parties that makes both parties happy. At the end of the day, we are very relaxed of our business since that we've always been convinced that this is a potential combination that creates -- that makes a lot of industrial sense, creates strategic value for both companies. But luckily enough, this is something that we don't need to do. This is something that we can look at an important opportunity that we would like to do. But again, it has to create visible material value for our shareholders. So if there is the opportunity to have something that makes parties happy and creates value for our shareholders -- for all our shareholders, they will go through. Otherwise, it will not. And as you can imagine, there are other projects and opportunities that we may or we are considering. So that's actually the status of the current situation.

The next question is from Adithya Metuku with Bank of America Merrill Lynch.

I had, firstly, just a question on Intesa, just in terms of modeling it. So just the balance sheet, should we assume that all the money flows, i.e. the payment for Intesa and the money you are going to get for the cash flow for Intesa's payment asset in the first half should be included in the first half numbers, just from a modeling viewpoint on the cash flow statement? And also, I just wondered if you could give us a view on -- some steer on what the free cash flow, excluding Intesa, was in the first half. Then secondly, I just wondered if you could give us some color on why Intesa's revenue and EBITDA decline trend seem to be doing better than the trends we've seen at Nexi standalone? And what exactly is driving this? Just so that we get a sense for how things are trending and how this asset is different to what Nexi is on a stand-alone basis. And finally, just a question for Bernardo. On OpEx for the full year, in the first half, your OpEx was roughly around EUR 250 million. Obviously, the cost savings plan only really starts in April. So when we look at the second half, would this be a reasonable number to take into account? Or would we assume that it should be lower than the number we've seen in the first half? Those are my questions.

I will let Bernardo on the first and the third. Maybe just say -- let me say one word on the second to help you understand the dynamics of the Intesa numbers. When we had the diluted days, especially for the first time, we agreed that it was this earn-out mechanism in case the business was over-delivering compared to a base plan that we had agreed, but there was also a protection in case things were not going as well as planned. And therefore, the reason why the underlying Intesa numbers are actually performing better than stand-alone numbers is because that protection is active and therefore is supporting revenues and therefore EBITDA and therefore cash flow and net income generated by the book. On the first and the third, Bernardo, balance sheet.

Yes. So I think the way you need to look at it is -- I'll just go jump into the last part of your question, what is the contribution to the cash flow in the period for Intesa? It's just roughly around EUR 60 million, EUR 6-0 million. And this was paid to us at the time of closing and reflecting the performance in the first half of the year of Intesa. So from a modeling perspective, I think the way we look at it is that business was ours effectively from the 1st of January. Just ended up paying for it in closing from a regulatory perspective due to antitrust clause, et cetera, on the 30th of June. But it is if it had been ours from the 1st of January, and that is the cash flow contribution. With regards to OpEx, I think your question was, given -- how to model the second half of the year. I think we've given you some of the elements that can be used given the targets we have set ourselves, and you should be able to multiply it out. But essentially, of the EUR 100 million cash savings, we have approximately 40% of them being CapEx, and we gave you the target for the year on CapEx. With regards to the OpEx, that's the other EUR 60 million, which is roughly EUR 20 million coming from volume-driven costs and EUR 40 million coming from transformation and other costs. And we've given you the percentage realization in the first half. The real problem there is the volume-driven OpEx in the second half become the volumes, depending on -- we have our view. I think Mo had asked about how the year is going to both, but the truth is, we need to retain some flexibility in shifting savings from -- if we do better than expected as we hope on the volume front, we might have more revenues and therefore need to cut the volume or the related, volume-related cost less. But we should also be able to offset part of this lower volume-related cost reduction with other transformation cost reduction maybe. So I think you have the numbers that you need to have in the slides and happy to discuss it off-line if you need further help.

Sure. Just a quick clarification. So the cash outflow for the Intesa deal, I take it happened on the 30th of June.

That's correct. Yes.

The next question is from James Goodman with Barclays.

I wanted to ask you just about the European payment initiative, actually, which seems to have sort of moved going to the spotlight since the recent announcement. Just wondered how supportive maybe you and Nexi are to this given -- my perception is clearly that you're more focused on international cards, and I just wondered if you perceive any sort of risk that this might actually support sort of the domestic card scheme. So just any thoughts around the topic and how potentially, if and when it sort of comes to pass, it might affect the business. And then a quick clarification. I just wanted to ask you on your acquiring and issuing volumes. If my recollection is correct, you've got, I think, ATM transactions in there as well. And I just wanted to ask you if that's right and whether ATM transactions in Italy have been remaining depressed versus the card volumes that you see.

James, so I'll take your first question. And Bernardo, I will try to clarify on the second. Listen, on EPI, I think in general, as a company, personally, we are very supportive on any initiative that promotes the evolution of digital payments. Because there is so much to be developed in our market that at the end of the day, the more usage there is around the various tools and solutions, the better it is. Before any strong opinion on EPI, I think it's important to clarify a bit better what is the consumer benefit, the merchant benefit, the bank benefit around it, which in terms of -- especially when you compare it to the current existing national debit schemes or the International Debit schemes innovation and so on and so forth. As you have seen -- maybe you have seen the Italian banks, for the moment, are not participating to this phase of the initiative. And my understanding is that they're not participating because of what I said before is -- I think it's not clear yet to them what is into this product and this proposition that this initiative is trying to deliver that makes a difference compared to the current situation. And second, they are at the moment very focused, as I mentioned before, in developing and enhancing and reinforcing the current national debit product. When we look at this from the Nexi standpoint, at the end of the day, to simplify something that could be a very complex debate. I mean a simple way of looking at this is a new scheme. And as when new schemes come in on the acquiring side, we activate the new scheme and we acquire on the new scheme. Historically, it was with a Mastercard. But by now, we don't remember -- forget with -- as we bought the books, we also do a lot of bank matter acquiring as well. We acquired JCB. We acquired UnionPay. We acquired the [indiscernible] schemes, and therefore, EPI will be definitely an additional scheme that we will acquire. And on the other side, given what we do on the issuing side every house, this would be a new product to be issued or reissued or somehow substituted in the end of the customer. So at the end of the day, we look at the new scheme. Our economics are the more we book, the more they are neutralized in between international, national or other type of things. So all in, we see it as a positive. Honestly detailed to be understood because it's very sophisticated, and, I would say, also complex to be implemented type of initiative because it requires a huge level of commitment and coordination among many, many banks across many, many markets, some of which have international schemes, national schemes, some of which don't have national schemes. And therefore, I think a lot of clarification is needed. Bernardo?

James, the question is on ATMs. And they're down, obviously, just similarly to the whole merchant services, actually counterintuitively or compared to your question, which is kind of suggesting this might be further down than what it's basically acquiring is. On domestic debit, they're actually pretty much down the same level, both physical cost transactions and ATM transactions and -- so cash withdrawals. And on international schemes, they're actually -- ATMs have done better than POS terminals. So on average, ATM volumes are down on a relative basis. This is a little less than physical acquiring.

Your next question is from Hannes Leitner with UBS.

I would start please with the transformation CapEx. Maybe you can give us a progress update on if you have started already shifting some volumes off. Or is it still around the IT -- building the IT infrastructure? And then the second question is again on some M&A-related. Swedbank announced, a couple of weeks ago, their strategic review of their payment business. I know it's not something completely at core, but are you considering to take a look at such assets already as one of those things that Italy might become, at one point, too small to keep growing?

Hannes, thank you for the question. Listen, on transformation CapEx, here on the page, you find a list of key projects that we've been on consistently with our transformation plan and we're making, I would say, progress across the board. And let me just take a few examples. First of all, Open Banking way and Corporate Banking, this is an area where, as I said, we're launching new products and services, and we've done a good chunk of investment. Next-generation omni-channel payment gate, it is something that, as we said in the past, would have been continuing this year and probably a portion of next year, but then we should be done with it because then you move into more ongoing tradition and for more innovation that goes into our ordinary plans. As far as the next-generation platform are concerned, we've been completing a few things. We've been completing the infrastructure -- the network infrastructure. That is done. We've been completing the GT POS processing platform and been migrating on our internal platform all the volumes that were externally managed. Over the next couple of years, we migrate on this also ones that are on Intesa merchants that, however, are already internally processed. And therefore, the benefit to move it, as you can imagine, is much, much smaller but is also good. It's always good to rationalize platform and shut down what we can shut down and stop investing on to focusing our efforts on one. CRM is something that is ongoing. There is nothing short term. I mean this is -- CRM and channel management platform is a list of probably not one. And certain, for example, dispute management, we have progressed is almost closed as some others are instead ongoing. I think the most important news is maybe on the acquiring core platform, where actually we have completed the first transaction only a few days ago. There is still a good way to go from the first transaction to start in migrating volumes, but this is something that will probably happen starting at some point next year. So a few of them are completed and effective and already impacting our financials this year positively. Some others are ongoing good quarters. I would say there is one I want to highlight is the one on the acquiring platform. On Swedbank, I think, as you know, we -- unless the press comments and so forth, we prefer not to comment specific cases. I think, as we said in the past, in general, we are starting to look at opportunities around Europe to understand better. And honestly, as incident for us, there are some criteria that are important. Clearly, value creation for our shareholders, number one. Number two, they must -- even if maybe smaller, not bigger. We might see an evolution to make them relevant for the size of our business. And third, very important, especially for the smaller assets, we must be very confident that they can be ran from a local strong in-place team without complexity or a large effort from our current team that, as you know, is fully focused in delivering our organic structure, potentially considering more transformational deals.

Great. Just a quick follow-up on your Slide 15. You provided the volume-driven revenues versus the installed base. Could you give just a brief update on Q2? I think at Q1, you have given for almost all segments that data.

Sorry. I didn't understand the last point. You were asking for kind of how is the dynamic going for the installed base-driven revenues?

Yes. So the volume -- yes. So what was the split between volume and installed base?

Look, listen, this split that we are giving here actually is referring to 2019 was to give you an idea what was the starting point. In general, as we said in the past, these installed base-driven bonds are much more stable. So we're not reporting and, honestly, we like not to start reporting all splits and so on and so forth. But I think here, the key message is that this 52%, in absolute terms, is actually much more stable. As we were commenting before, for example, on the terminal side, now that despite the slowdown in the COVID times, that, for example, component of volume is actually growing instead of going down. Cards, depends on the mix. It depends on the situation. So -- but that was really referring to the structural shape of our revenue component.

The next question is from Sébastien Sztabowicz with Kepler Cheuvreux.

One on the short-term outlook. We are now 1 month into the third quarter. Could you help us a little bit understand the dynamics since the beginning of the quarter in terms of revenue evolution? Basically, also you model Q3 in terms of revenue decline. What do you have in mind for Q3? And the second one is quite simple. Could you give us your free cash flow number, including all exceptional items in H1 2020 and also the comparable number in H1 2019? So the published figure number will be very helpful.

So let me try -- on the first one, unfortunately, I mean, it's already very difficult for us to give an outlook, a very hypothesis-driven outlook for the rest of the year. And so we cannot guide too much on the third quarter. I mean at the end of the day, you can kind of draw a line from where we are today in terms of volumes and what I said before. Obviously, if we believe we can go back to revenue growth by the end of the year, this means that volumes will go back to positive all-in -- or actually, more than positive by the end of the year. You can draw kind of a line from there, for sure. Second quarter was the most -- by far, the most affected. And from there, we should be seeing recovery. We gave you the numbers that we're seeing in July. I think at the end of the day, the numbers you have seen there are more or less the numbers for July, given the fact that today, we are already at the end of the month or towards the end of the month. On free cash flow, Bernardo, I don't know if you have the answer now, or we come back to you...

Well we'll need to wait until we publish the first half results, which should be in a couple of weeks' time, and you'll have the reported numbers in there. But I think you have some information here on Page 26, for instance -- or sorry, not 26. Where was it? On Page 24, I think, with some of the transformation costs, which we have normalized outside of the cash flow. Some of them are noncash, like the LTI or the IPO costs, which were borne by Mercury. So I think to give you the exact answer, I'd rather wait until we publish the results in a couple of weeks' time in a full report. And you'll have...