Novaturas AB (NTU1L.VS) Earnings Call Transcript & Summary

Dear ladies and gentlemen, good morning, everyone, and welcome to quarterly webinar for Novaturas. Today, Nasdaq Vilnius is hosted by Chief Executive Officer of the company, Ms. Audrone Keinyte; and Chief Financial Officer, Mr. Tomas Staskunas. It's a pleasure to meet and to see you online. Firstly, the management of the company will comment Novaturas' financial results of the first quarter of 2020. The questions can be submitted during the whole presentation, and they will be addressed after the presentation. Dear Audrone Keinyte. The floor is yours.

Good morning, everyone, investors, members of financial community and participants of today's presentation. This morning, we will be presenting the results of the business activity of Novaturas Group during the first quarter of 2020. Thank you for your interest in our company. The presentation, as usual, will be held by me, Audrone Keinyte, the Chief Executive Officer of Novaturas Group; and our Financial Director, Mr. Tomas Staskunas, is together with me, and will also assist in answering your questions at the end of the presentation. So as usual, during our presentation, we are reviewing the main and key financial and other performance indicators. Today, we will also look through them. But of course, the main focus would be on the COVID-19 crisis and its effect on the company's results because tourism industry and Novaturas Group was -- and the whole sector was the -- one of the first ones that had been affected. And the impact is one of the strongest among all the sectors. So first of all, the financial results of the first quarter of 2020. During the first 3 months of 2020, we have generated a turnover of EUR 23.4 million, which is by 19% lower than 2019. On the other hand, in 2019, the first quarter -- the revenue of the first quarter was increased by almost 12% compared to the previous year. So considering that at the end of February, we have already been affected by coronavirus, the revenue is still on a pretty satisfactory level of EUR 23.4 million. The EBITDA of the first quarter of 2020 is minus EUR 190,000 compared to EUR 83,000 in the first quarter of 2019. Finally, the net loss of the first quarter reaches to EUR 353,000 compared to the net profit -- net loss of EUR 148,000 in the first quarter of 2019. So I would like to give a little bit more explanations of how we were managing and handling the main factor of, let's say, of the results, which were affecting the results of the first quarter to coronavirus. To start with, I would like to say that when coronavirus has already affected China and the first -- when we heard the first news of coronavirus in China, it seemed to be still quite far away because Novaturas Group does not hold any business and any business relations with China. So during January until middle of February, we almost have no impact on our sales and on our business activity due to coronavirus. Even though we have quite good demand and quite a strong portfolio of long-haul destinations in Southeast Asia, I would say that it was the minimum reaction in the market due to the coronavirus, which already has been existing in this region. So until middle of February, we had made some, let's say, questionings from the clients regarding this. We had very little cancellations for the long-haul destinations. But basically, we would say that we had -- we felt no reaction and no impact of coronavirus until middle of February. In general, the year has started very much satisfactory. The January and February capacities were more or less planned to be the same as 2019. While in March, we have planned an increased capacity because already in the several last years, we already felt that March was becoming more and more strong month. So considering the first quarter, it was supposed to generate quite good results. And we also had, as already mentioned in our previous presentations, we have very satisfactory and very positive early booking indications from the summer 2020. The first strong hit of coronavirus happened in the second half of February when this virus -- when we got to know about the virus spread in Italy. And since then, those news have been just -- every day, the situation has been changing and becoming more and more serious. We, at that time, we had our clients in Italian resorts -- Italian ski resorts. So in the next couple of weeks, we had to stop our operations in Italy. Afterwards, since the spread continued, the virus continued to extend to the other regions in the middle of March, on the 12th of March in Lithuania. And then on the 14th of March in Latvia and Estonia, the official institutions have issued restrictions for traveling. And since then, our business activity has been suspended temporarily. We had to repatriate, first of all, all clients from the destinations. We have thousands of clients in Egypt, Tenerife and Dubai. So those were the main destinations from where we had to operate the repatriation flights. And in more or less 1 week, all our clients were brought from the destinations on our cost. So this is more or less the prehistory of all the crisis. And from the first day, of course, we had to take very serious measures on handling this crisis because as mentioned that we were one of the first sectors -- one of the sectors that felt and that had been affected first by this virus. So it was very much important to be very fast, very much effective and to make needed decisions on a daily basis because the situation was changing, not even daily, but hourly, I would say. In order to handle the crisis, we have taken certain actions and certain measures, which I mentioned in the -- in this slide, but I would also like to comment a little bit more -- in more details about them. Most of those actions, they were not done in certain sequence. They were done in parallel because all of them are of the same importance. Of course, our main focus and the first focus were the clients on the destinations so repatriation was, by all means, the first priority since the health and safety of our clients and our employees is the most important priority as mentioned. At the same time, we have also had to do a strict or inventorize all our costs and to hold a better strict cost minimization program. So first of all, all not the most important, not the first priority investment projects were suspended until we can continue further on our business activity, and we can again, review them and maybe modify according to the situation. So all those not priority projects were suspended. Second, we had to -- we have reviewed our human resource policy. Of course, we have to make sure that all our services and all our businesses processes are not affected, and we cannot compromise with the quality or the speed in this case. So in certain cases, we had to strengthen certain of our departments because of very high load in certain parts of the activity processes and certain departments have been decreased or we had to shrink them because of no need of their performance at this particular moment. As well, we had to -- we have reviewed all our suppliers. We have renegotiated all our services, the costs, the tariffs of them. We continued working strongly with our destination suppliers in order to renegotiate and to minimize our -- the net cost of our services. And the destination, we had also to renegotiate or to rediscuss our existing commitments and obligations and to adapt them to -- according to the actual situation. We also have had a very strong focus on the financial risks management. We have -- we are controlling much more strictly the -- our corporation and not only the general performance, but the financial performance of our retail agencies in all markets in order to make sure that our clients are served well. And as well, we don't hold any additional financial risks. As well, we have -- we are initiating and working quite strongly with the associations and also intending to use all the state aids measures that are provided or can be provided by the governments of Lithuania, Latvia and Estonia. So first of all, I would mention the employment support in all 3 countries. The employees are being partly paid by the government in case of a downtime. So this measure, we are -- we have already incorporated, and we are expecting this -- the support from the government in terms of this. As well, there are certain exceptions or postponement of the taxes in all 3 countries. So this is what we are also incorporating into our activity as well. We are expecting that the governments would provide with certain specific support measures for the tourism sector. And this is -- the discussion on this is still continuing with the government -- with all the governments in all 3 markets. What is very much important in today's -- from today's perspective is that the governments would consider this situation of the COVID as a very specific situation, as extraordinary circumstances. And due to this, the recommendation would need to be specific. It cannot be the usual legal acts are not -- cannot -- should be, let's say, interpreted it in a different way in to this situation. So for us, the most important, like for all operators and travel agencies in all markets, it is the most important that the money refunds for the canceled trips due to COVID-19 would be -- would be either the term extended or certain different other solutions would be offered and confirmed by the government. So the money refund issue is -- or the question is still ongoing in all 3 -- in Lithuania and Latvia, while Estonian government has already stated that the money refund is obligatory. And this question at this moment is not continuing to be discussed. But on the other hand, we are also handling the situation by offering our clients of the canceled flights with very attractive conditions. We are offering them to change to later periods in 2019 -- 2020 or into this more similar date of 2021. And this change possibility is offered to them to be done with the same price that their original -- that the original booking was done. So that's very exclusive and very attractive condition. Because logically, the prices of the services are increasing each year and especially in the current situation, when there is a lot of uncertainty. Nobody can very much forecast what would be further trends of the tourism and aviation industry. And well, logically, after such crisis, we would not expect that the prices would go down. On the contrary, most probably the infrastructure and the services would transform, they would be adapted according to the new requirements, which would increase the cost, most probably. As well the aviation industry, after this turbulence, would also have -- there would be a lot of changes in this industry. The supply, but most are probably be lower and we would not expect as well the price -- or the price drop on this part. So for the clients, it is, I would say, an exceptional opportunity to fix their holiday package with the same rate, the same price that they had for 2020. Considering the -- as well, considering the state support, we are also discussing with the governments regarding the -- the governments and also we are expecting to -- further measures to be confirmed, such as loans, state guaranteed loans. And also maybe the loss compensation because Novaturas Group as well as many players of the industry had generated quite significant amount of the loss due to repatriation of the clients as well as lost income for the periods with canceled flights. So this is more or less about our past actions and measures taken due to the coronavirus spread, and they would continue further with the performance indicators so that we can measure where we are compared to 2019. So first of all, talking about the revenue since its supply, in 2020 first quarter, we have had 31,200 of the clients. Compared to last year the drop is by 24%. And the revenue, on the other hand, which reached EUR 23.4 million has decreased compared to 2019 by 18%. If you look into the product category, there is no changes. As usual, the main product is our flight package tours which remains more or less on the same proportion, almost 85% of the total product share. If we look into each country, as usual, Lithuania has the highest numbers. So we have had 17,500 of the clients from Lithuania -- sorry, 12,600 clients from Lithuania, Latvia 7,200 and Estonia 11,200 of the clients. You can notice that the decrease in Estonia was the smallest one, was 16.2% compared to Lithuania, which was 27%. In Latvia, it was 28%. In Estonia, this percentage or the drop is smaller because in Estonia, we have managed to increase, in general, our capacity by taking over [indiscernible] market clients and operation to certain destinations from January. So this has increased our capacity and our market share. And due to this, let's say, all the canceled flights and canceled bookings from March did not have had such strong effect on the total numbers compared to other markets. In total, during the first quarter, we have had 31,000 of the clients, which is 24% lower compared to the previous year first quarter. Destination-wise, the Egypt and Canary Islands and also long-haul and skiing. So those are our main product destinations in the winter season. And I would say there are no big surprises compared to 2019. First of all, we have -- we can notice, let's say, a certain drop in the destinations of Egypt. On the other hand, in 2019, Egypt has been growing very much compared to 2018. That's why in 2020, we can see a more balanced distribution between the destinations. So Egypt has had almost half of our capacity or let's say a little bit more than half, 50.3%. Tenerife Island, in Tenerife Island we can -- we reached 14%, which is by a little bit more than 3 percentage points more than previous year, the same period. Long-haul destinations continue to grow. In the last few years, we are recording an increase in demand for those destinations, and 2020 first quarter is not an exception. We have reached 17% of this year into the long-haul destinations, which are such destinations as Southeast Asia as Thailand, Vietnam, Bali as well, the Indian Ocean destinations, such as Seychelles as well as Caribbean, Cuba and certain other destinations. Skiing. Skiing continues to have a stable demand, 12%. And on the other hand, this share would have been higher if corona would not have entered Europe because due to corona, we had to cancel all flights in Lithuania from 29th of February to Italy. As well, we had to cancel the flights from Latvia and from Estonia the week after to Italian ski resorts due to the coronavirus spread there. So if this would not have happened, skiing destinations would have had a higher share among all destinations. And the other destinations are 6%. So destination-wise, we have quite a good balance and still the strongest destinations continue to be Egypt and Tenerife. Distribution -- distribution. Again, more or less, stable numbers. One positive point which we noticed is that our e-commerce is -- has had a slight increase. So we had around 1 percentage points more of the web sales. We also had more unique visitors on our website compared to the first quarter of 2019. And still, the main distribution channel remains our travel agencies. In Lithuania, Latvia and Estonia, we have quite significant number of travel agencies in all 3 markets, around 400, but a very big percentage share of -- a very big part of the sales are done by our key partners, which are our main distributors in the 3 markets. So those are the biggest travel agencies -- the most stable travel agencies in Lithuania, Latvia and Estonia. And during this crisis, as mentioned, that we have had been monitoring very accurately and strictly our -- the situation of our retail agencies. And we -- so far, we are satisfied, and we can -- we are considering it positively how the key partners have been coping with the crisis and that we can continue and we can forecast and program our stable future cooperation after the crisis would be over. Talking about our profitability indicators. So first of all, the EBITDA in 2020 first quarter has reached to minus EUR 190,000 in the year 2019. First quarter, it was EUR 83,000. The net profit reached to EUR 353,000 in net loss. Again, with a strong start of 2020 that we had already -- if considering 2019, the fourth quarter of 2019, we had already had noticed and recorded positive results and increases or growing and positive indicators compared to the previous year. So we will continue on this trend to 2020. So definitely that those results will have been completely different if the coronavirus would not have spread so widely among the globe. Efficiency and productivity issues. So here, we can -- well, load factor, more or less, it is always the same, around 97% of the flight load. The profit per pax in 2020 reached to 43%, but -- EUR 43. But since it is being calculated as average for all paxes, so of course, that -- the canceled flights and no activity from the second week of March has affected very badly the profit per pax results. One positive indicator, which continues already as a general trend for the last couple of years, we can see that the average package tour price is increasing standalone. And in 2020, the average price was 751. Usually, in the winter on the -- especially on the first quarter, the average package price is higher than the other quarters because we have part of the -- our packages are for long-haul and long-haul destinations are usually more expensive because of the higher airfare. So due to this, the average package tour price is already higher than the other quarters. But even if compared to 2019, it is higher by EUR 30 which means that the clients have been booking more expensive trips. And while usually in the normal circumstances, it will be very much positive result, a positive indicator. But on the other hand, we understand that after this crisis, we can see -- it's very difficult to forecast what the weather would be and what would be the needs of the consumers, the habits of the consumers and the products that the consumer would be looking for. Therefore, those indicators do not necessarily define the future pace. Now talking about the operating expenses. In general, I would just like to remind shortly that in 2019, our total operating expenses, excluding commissions and one-offs were already decreased by 19% because in 2019, we have taken a lot of measures to increase our operational efficiency and to optimize the costs. In 2020, we were more or less continuing on the same track. But since March, of course, we had to take much more strict measures and actions. And since the second week of March, those operating expenses have been decreased significantly. The average of our total operating expenses, excluding commissions and one-offs, the decrease is 22% for the whole quarter, but it was mainly affected by the very strong decrease and drop of the expenses in March specifically. For the future, we are -- for the months of no business activity, the -- the minimization of our other overheads continues to be one of our, I would say, main focus points because this is what helps us to maintain or to handle and to improve the liquidity situation. So this is one of our main focus points. On the other hand, we did not -- we did not fire big amounts of the employees. We are continuing more or less with the same team. Of course, we had to terminate our employment contracts with employees, which are the best seasonally, such as representatives on the destinations or our tour guides because currently, when there is no any kind of tourists in the destinations, any kind of activity in the destinations, their performance is not needed. On the other hand, all much -- the major part of our office employees remains with us. At this moment, we have quite a lot of different projects, and we still need to handle our existing bookings, et cetera. So we are doing this. And apart from this, we are getting ready for the restart of the operation. And of course, that the state support in terms of employment helps us a lot to decrease our operational -- or our overheads during this period of non business activity. Also talking about this, let's say, crisis situation, I would say that the asset-light model has helped us a lot because without having any high exposures, we could react very fast and manage and adapt very fast. So this is what we are continuing to do. And therefore, this -- even with such very serious and strong crisis, we could manage the situation with, I would say, quite satisfying results at least for the first quarter. Of course, the second quarter depends a lot on what weather would be, what would -- when we can -- the main question is when we can restart. And here, we are depending on certain factors. First of all, of course, the borders, the borders opening and when we would be allowed to fly. So it's not only the opening of the borders in the Baltic states, but also in our destinations. Second thing, is, of course, the regulations, the regulations for the aviation, the regulations for the tourism industry and infrastructure. So this is another factor which is very important for us that we can more or less plan our restart. So those regulations might -- are not yet definite. We are just hearing certain considerations and thoughts of this. But most probably, there would be changes in order to seek to guarantee the health security of our clients. And therefore, we are coordinating -- we are intensively -- or in a very intensive communication with all our suppliers, with all the institutions in order to be -- to have a more clear vision and news of what would be the new requirements and in order to be ready for the restart as soon as we can do it. On the other hand, as mentioned that, at this period, we are also working with our existing bookings that are done -- were done for the canceled periods. As well, we are offering for the bookings of the nearest months, this very attractive change of possibilities for the next year or for the further periods. So again, due to this, we have decided to open very early our future seasons. So the winter 2021st season, the main destinations have been opened in the end of February. As well, the summer 20 -- the main destinations, summer '21 -- sorry, the main destinations have been opened as well in April. And just in couple of weeks more. We are opening the rest of the winter destinations and summer '21 destinations. So in this way, we have everything on our sales, on our portfolio. As mentioned, that most probably there will be some adoptions of the new measures, new requirements, et cetera, but we are completely ready with our product. And as well, we are ready to as well change according to the consumers' needs because as mentioned, after this crisis, most probably the consumer would have different needs, different habits and maybe even different buying habits. So this is where we are very actively and proactively working on in order to be ready for the very fast and successful restart. When it would happen and when we could start our business activity, as mentioned, that those are factors that we depend -- there are certain factors that we depend on, and those are mainly related to the governments and requirements of the official institutions that we are communicating with very closely in order to be ready. I would say that this is from my side today as well in the -- during the last months, we have had certain changes in our management board as well as supervisory council. So first of all, the previous Chairman of Supervisory Council, Sebastian -- Mr. Sebastian Król, he has stepped down from this position from the supervisory -- the Chairman of the Supervisory Council and Supervisory Council itself. Our the -- one of the members of the Supervisory Council, Mr. Vidas Paliunas, has taken over this position and became a Chairman of the Supervisory Council. Mr. Vidas Paliunas is one of the founders of Novaturas Group in 1999, and has very deep knowledge of the tourism industry, especially in the Baltics -- in the Baltic states. And he's still one of the shareholders of Novaturas. As well, we have had a change in the management board, Birute Cepanskiene, who has been the CCO with the company for the -- since, I would say, almost from the establishment of Novaturas. She was with the company. She -- due to the personal reasons, she has resigned. So Ieva Galvydiene, who is also a very long-term employee, has taken over her position. And Ieva, during all career, she was mainly in charge of the sales reservations analytics department. So now she has taken over the commercial part. So that's it from our side. We would be very much pleased to answer your questions.

[Operator Instructions] And the first question is the following: what is the sum of advanced payments Novaturas received from clients for packages which were canceled during quarantine period?

Hello, everybody. So the amount of prepayments from customers for the cancel at already flights during the quarantine period, group price are about EUR 4 million.

How are your modeling -- how you are modeling the future? What are specific scenarios you are developing for restarting operations?

Well, there are actually a lot of scenarios, but it is very difficult to really forecast what would -- when and what would be. Because we are not depending only on Lithuania, Latvia and Estonia. And we are depending on the global situation. And not only on how the governments of the Baltics would decide and when they would open the borders and what would be applicable to our markets, but also on what is happening in the destinations and how the destinations are ready. So well, we are still -- at this moment, we are following and in general, in our business activity, we are following the recommendations and the instructions of the government. At this moment, the quarantine or the extreme situation has a certain deadline in each country. And this is when the flights are canceled. For the further periods -- for the future periods, more or less from June, we are not -- they are still on the sales, but we are offering our clients, as mentioned, attractive change conditions, so that they don't need to wait and to worry about this. If they want to change, they can change to very -- let's say -- with very flexible conditions. What would be a possible scenario? It is, I would say, too early to say. Just this week, we are starting to hear about the flights possibility and opening the flights to certain routes, certain hubs. From Lithuania as well in Latvia and Estonia, we have also similar talks. Therefore, I would say that only this week has started to give us a little bit more clarity or more indications of the fact that traveling and aviation and flying can -- will be operating. And this is -- there are indications that it will be operating in the near future. On the other hand, we are following very accurate situation on the destinations. According to what we see now, and according to what we can feel from our governments that most probably, if we manage to operate in the summer, Europe would be the first region or the priority region. Moreover, that such destinations like Greece and Bulgaria, which are very important for destinations for us in the summer time, they have very positive -- or quite positive indications of handling this COVID cases. They have quite small numbers of the COVID cases in their countries. Therefore, there are certain internal scenarios that we are having, but as mentioned, I would not be able to state a clear and definite scenario because there are -- the indications are still very much uncertain, and there is no certainty yet.

One more similar question about opportunities. What opportunities are you considering to adapt to the current situation? Change your products, introduce local tourism, maybe?

Of course, I would -- this is a very right question, I would say, because the crisis is not only at the critical moment, but it's also a moment -- it might be a moment of the opportunities, which may be in tourism, are a little bit less because especially in this crisis when the movement of the people has been restricted so the opportunities are not as in the other sectors. But in tourism -- opportunities in tourism are not made as in the other sectors. On the other hand, yes, we are we are working on other different products as I have mentioned that we know and we feel already that the consumer will change and the traveling will change. There will be more focus on the health and safety. There will be maybe more focus or even more need for different destinations, different types of products. In certain cases, maybe a little bit less of massive tourism. Certain destinations might be -- maybe, I don't know, might be abandoned, if I can say so for a certain period as well. And the local tourism is another very considerable products or type of product. So we are considering everything. We are working on many of those, let's say, projects. At this moment, I'm not able to say publicly that's one or another, let's say, product is being opened. But internally, the products and product portfolio is being adapted very actively based on the current situation and our clients.

How long can the company survive without restarting operations?

So the company has satisfactory current liquidity. And thinking about possibility that the crisis will be much longer, not 1 or 2 months, but it could be longer. We are working on additional liquidity measures. We are working on additional loans, partly guaranteed by the governments in all 3 markets we're operating.

As we know, Novaturas officially announced that tour operator is responsible for all their client funds. So what reserve does Novaturas formed concerning possible agencies bankruptcy? Did Novaturas informed about its bank of which it should guarantee and consumer protection board?

So talking about the agencies. First of all, in general, the cooperation with the agencies is based on certain financial risk measures. The most of the agencies are -- that we are cooperating with, they have deposits. And therefore, they have a credit limit in this -- in the amount of these deposits. In certain cases, it can be that an agency does not have the deposit, but they do prepay for the -- all the clients that are departing. Basically, this is, I would say, the general system that we are cooperating with the agencies. On the other hand, all the agreements is -- the tourism agreement that is signed, it is signed between client and Novaturas, so Novaturas holds the responsibility. And in the case of the bankruptcy or insolvency of the travel agency, we can -- we have the right -- or in a case the travel agency is not following the agreements between Novaturas and the travel agency, we have the right to take over all the clients and our -- the agreements of the clients. This is actually what happened recently with one of the agencies in Lithuania. And due to the fact that the travel agent did not follow contractual obligations and did not fulfill all the requirements for the client services for handling the bookings and other, let's say, needed contractual obligations. We had -- we were forced to take over the clients and serve them directly. So basically, the financial risk, if there is such, it is being handled by Novaturas. As mentioned, we are monitoring very closely this part.

Next question. How you would comment on huge future hedge losses? Almost EUR 3 million on March 31, so during April, it has increased drastically again, how you will handle the situation?

Yes, we have hedges, which very suddenly became losses after Saudi Arabia started oil price war with all other oil producers in the world. And yes, currently, we have huge potential loss for currently held open positions. And all those open positions are to be closed in the next 1-year period. So during the next 1 year, we are not -- we are not obliged to close all the hedging at once. We are closing it part of hedging contracts each month. And it could also be some changes in the price of oil because of economies reopening and the supply of oil decreasing. So we can also expect that maybe in the near future, we will have to close the positions with significant loss. But maybe not all our positions will have to be closed in such a significant loss.

We do have more questions. How -- just a moment, please. How do you assess the difference between Novaturas' current liabilities and current assets? How will you handle the prepayments you received in advance, coupons or refunds to customers? Can you expect anything from the major shareholders of enterprise investors who have publicly informed that they will leave the company? Are you negotiating a loan deferrals with Luminor. So these were the questions coming from one listener.

Yes. So I would start from the difference between current liabilities and current assets. So the biggest part of current liabilities which we have, client prepayments for the future trips they have bought. And those client prepayments are extending already to next year. So we are showing them as current liabilities but actually, part of those liabilities are extending to the quite distant future. So regarding coupons, we are still -- we are planning to provide this kind of solution, this kind of option to our clients. Of course, according to the laws, it is not obligatory to the client at the moment. But we are also providing clients very flexible change terms and this coupon will be additional option for the client. Regarding support from shareholders, of course, the enterprise investors is the biggest shareholder of ours, but we also have other shareholders. They are not our only shareholder. At the moment, we cannot tell that the shareholders are supporting company because at the moment, we are still working with satisfactory liquidity. And we are also working regarding additional financing before state guarantee loans, which are promised in all 3 markets. And also, of course, we are talking with our main bank, Luminor Bank, about the terms of our current loans.

How you would comment on acquisition of one of your partners' travel agents, Megaturas, why Novaturas counterfeit marketing invoices and took Megaturas clients? Can you comment on the work with other agencies?

Yes. So I would like -- I would comment. I have already made a Luminor explanation of this. So Megaturas has been one of our partners in Lithuania. And due to the fact that there were certain contractual obligations that were not followed from Megaturas side, there was no reaction from the director and owner of Megaturas to our warnings, our requests. And we have decided after several trials to cancel the agreement because our clients simply were not served. And especially in this -- since corona has already entered the -- since quarantine, there was no handling of our reservations. And this period was crucial because there were a lot of clients which were, for those affected periods, and they simply were not handled. They were not contacted even. So -- and due to this, in order to guarantee the security for the clients and a proper, correct and quality handling of those bookings and in order to manage our own risk, we have decided to cancel the contract. There were several warnings sent before to the director and owner of Megaturas. As well, there has been a change in the management of Megaturas, but we were not -- in the beginning of April, but we were not informed about this while we were supposed to be informed about this according to the contract. So there were a lot of, I would say, circumstances that brought us to this action. For us, the most important is the clients, their security and our obligation towards clients. So that -- the action that we have done now has guaranteed that the clients are safe with us and we can provide them with the services and the services expected and signed on. What about the marketing invoice? So when cooperating with the travel agencies, we are following a lot of different marketing projects. One of the projects, especially with the key partners, with the biggest agencies, one of the projects that we have had with Megaturas is the screens in their -- like sales points, in their sales shops. And on those screens, those screens, we had to rent from the supplier, and we were sharing the cost. And if we cancel the agreement, this -- the contract is ours with the suppliers, so we were sharing together with the agencies -- with certain agencies, the ones that have the sales shops and the commercial centers. So this -- due to our -- the cancellation of our contract with Megaturas, we had also to cancel this project and the screens for those sales shops, but we have to pay them to the supplier. So that's the -- what is related with this marketing cost that Megaturas is indicating. How can other agencies be safe now working with Novaturas? All the agencies are safe, and we can assure -- I mean, travel agencies are the main distribution channel for us, which we are focusing on, and we are strengthening very much. And we would never have other aim than that. And if there would be any different intentions, then we would work towards different direction. And we wouldn't -- and this distribution channel would not be that big as it is now, with 75% of the total sales share. As long as we see no risks and no threat to our clients and our, let's say, cooperation with the travel agent, we would be just more than happy to cooperate with travel agency which is fulfilling our requirements and criteria. So at this moment, I would say that we don't see any critical points among the Baltic states, among our partners' travel agents. As mentioned, that we are definitely in a very close contact with them to make sure that they are all, let's say, on a healthy condition, and we can -- we would handle together during the crisis and everything is according to the contract.

There is one more question similar to what we touched upon already, but still when Novaturas is planning to start refunding significant advanced payments for clients and follow the law?

So regarding refunds, there are still some laws in the parliament discussed regarding the requirements for refunds. And as you may know, yes, there are formal requirements -- legal requirements for the refunds to be made in 2 weeks' time. But these legal requirements are made when nobody expected that the total industry can be stopped for several months' period without any clear visibility of reopening. And actually, in all over Europe, airlines, tour operators, we are either delaying the refunds or some laws are already implemented with longer refund terms than 2 weeks. There are numerous countries that already applied law of refunds in half year time or even longer.

Isn't it a time for Novaturas to write-off goodwill from its balance because it misleads investors about the real financial situation of the company and it might show wrong information about the possibility to fulfill its obligations? As example, Thomas Cook before bankruptcy did that.

I would like, once again, to comment about the goodwill that it is actually not related to 1-year performance of a company. The goodwill shows long-term value and value creation possibilities of the company. And we do not have a doubt about the long-term value creation possibilities of the company at the moment.

What is the client's response to your offer to postpone travel until 2021? How many of them, in percentage, if possible? And do I get it right the price remains the same?

So talking about our offers to postpone traveling and to change their existing bookings. We are actually offering the change for the clients, which are -- were supposed to travel from the start of the canceled period of current time or, let's say, from the middle of March, from the second week of March until end of June. As mentioned, we are also offering to change -- attractive change possibilities and offers for the clients also of the nearest months so that they have the choice and flexibility to postpone their traveling. Up until now, we see quite positive indications from 35 -- from 30% to 40%, depending on the markets. The clients are changing and more than half are changing to 2021. Still, this process is all continuing because it's quite big numbers of the bookings. So it takes time to handle them. And -- but already by now, I would say that we can count on more or less 40% of the clients which are changing. Yes, it is the same price that is offered to the clients. And of course, we had to deal with the suppliers, also our purchase dates, the services in the destination and to fix them at the same net cost that was for 2020.

One more question about the liquidity situation. Please comment your liquidity situation? And what is your real cash burn OpEx per quarter after all efficiency measures in quarter 2?

So we have started cost-cutting and efficiency measures already from the middle of March. And already our March overheads were lower by about 40% comparing to our budgeted numbers. And from April forward, we expect to reach at least 60% lower overheads. And they could be even by 70% lower what is our normal level of OpEx.

Two more questions are left. Can we make a conclusion that Novaturas in the position of liquidity problem is with a huge amount of liabilities to clients and Luminor Bank? And so if Novaturas would act by the law, it couldn't refund EUR 4 million to clients for canceling -- for canceled packages with EUR 3.2 million cash in the amount -- in the account.

First of all, I would say that the conclusion which is made in that question is wrong. We are in the situation that we can handle the crisis. Our current liquidity is satisfactory, and it's enough for our very near liabilities, which we are facing. Also, we are working on additional liquidity measures, which are promised and given to the businesses in all 3 markets we are operating. Also, we are talking with the bank about the different conditions in our contracts.

And the very last question today is the following: what is Novaturas packages cancellation policy? If a plane flight takes place, but your client refuses to go on a trip, can he or she request to get a refund for what he or she paid for the package?

So in normal circumstances, if the flights are operating and the client wants to cancel the trip, then the cancellation fees would apply, and they are -- they depend on the -- how much in advance the cancellation is done before the departure trip -- before the departure date. So there is a certain, let's say, a certain percentage of the booking value that has to be paid as a cancellation fee. And this is mainly due to the fact that the costs are already done. There is already a cost for the seats as well as, in many cases, the hotels are also applying the cancellation fees. But this is in normal circumstances, if the flight is canceled due to such extraordinary circumstances like this. And if the flight is canceled by the tour operator, different terms apply.

So all the questions are answered. On behalf of Nasdaq Vilnius, thank you, everyone. It was a pleasure being with you today. A record of the presentation will be available in the Nasdaq Baltic YouTube channel webinar playlist and on the website of the company, novaturasgroup.com. Dear Audrone Keinyte and Mr. Tomas Staskunas, thank you very much for your presentation and for answers given. Participants, thank you for joining. Everyone, have a wonderful day.