Sphera Franchise Group S.A. (SFG) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. My name is [ Pablo Wichovsky ] from WOOD & Company, and I will have the pleasure today to moderate the fourth quarter results conference call with Sphera Group. Today, the company is represented by Georgios Argentopoulos, CEO; Valentin Budes, CFO; Monica Eftimie, CMO; and Daniel Palita, Transformation IR Manager. Now I would like to pass the floor to the management.

Yes, before we start, I would like to remind you that this call is being recorded, so that is going to be public information. I will pass the word to Georgios Argentopoulos, the company's CEO.

Good evening, everybody. I'll take you through the presentation today. I will start giving you the highlights of 2019 as Sphera Holding and their brands. My colleagues here will do a little bit further in details in terms of financials and marketing and operations. And I will close the presentation with a sneak view on the future, and then we will be responding to all your questions. So if I can -- if I can then resume -- summarize 2019, our focus was, a, to get back to profitability levels that we have promised and we were used to as a group. We aimed in reorganizing our group based on the implementation of new systems, fundamental systems, such as a common ERP in all the group companies. Obviously, the process below this -- or behind these systems are all redefined. And we focus also on reassessing critical operations, such as Pizza Hut delivery, which was underperforming significantly, affecting the group results. I can say that this was a very successful year in terms of all our focus points. And I will give you the top highlights. I will start with the only negative one, which is our development plan with -- in view or in comparison with what we've predicted and budgeted. We had planned for 24 stores, but we managed 16, this came mostly from delays in our Italian operations. This resulted to about 77% of the sales that we planned for the new stores. However, with the efforts on all our other fronts, we managed to achieve our total sales at about 96% of what we've budgeted. We used -- we had significant price increases, but I will explain how this resulted when we go brand by brand. And through other efforts focused on our costs, we managed to achieve the EBITDA planned and promised and actually overachieved it to the level of 10-plus percent. Also at the level of 99.9% in the absolute number of EBITDA. So another final highlight in all these operations 2019 was that it's, for the first time, we saw not such a big increase in transactions or, in some cases, decrease in transactions. We will go brand by brand, and I will explain what we believe is the reason for that. If we are referring to the presentation we have sent, a quick view on Page 4, which is the macroeconomics. Pretty stable CPI, above 3%. The main effort, the main situation, not only us, but the whole retail market-facing, is the labor market, where it's, on one hand, very difficult to find personnel and also very difficult to retain personnel. And we see a tremendous increase in labor costs and especially for this kind of business like ours, which are heavily based on the basic salary. This is driven now further than the increases in both of the basic salary from the government, also to competition, as all of us are bidding for scarce resources. There has been a trend in the market to import labor. We embarked on this trend very recently, and we will examine the efficiency of imported labor. And if it proves to be as we planned, then we will move further to importing further labor in order to stabilize this element of our business. Now I'll go brand-by-brand, and I'll go to KFC. For your reference, Page 6 of the presentation. We had an all-store sales growth of 16%, a very healthy growth, but the same-store reaching 5.9%, and 14 net openings contributing 9.5 points in the year-to-year growth. A more simple way -- in a more simple way, not referring to specific numbers, you can see that we have a downturn in terms of same-store performance as we compare to previous years, and especially in the last 2 quarters, especially the last quarter. This is due to transactions decrease. And here is our assessment about this transactions decrease. This is -- the easy answer would be price increases we implemented, but we don't consider that this is the main factor. The main factor, again, is labor, where -- as we have understaffed stores, hence losing transactions. And due to the turnover of personnel, also lower quality of operational -- operations efficiencies, which results -- which we believe is the main factor. Another factor for loss -- for decreasing transactions has been what we faced during the end of October and beginning of November, a period of about 6 to 8 weeks, when we had some issues with certain bacterias find in ice and Coca-Cola's ice, and it took us about 4 to 6 weeks to restore this and we had a significant impact during this period in terms of transactions as we could not sell cold and -- cold Coca-Cola, mainly. The third one is -- the third reason, we believe, is a market trend, whereas we see it in the whole market a decrease in transactions continuing also for the first months of this year. We probably -- it's a consumer's behavior situation. We don't know if all this has to do with major events, such as the coronavirus and implications of consumers' psychology. However, we have noticed the following. Most of it comes from malls. And while we have increased transactions through delivery and we have stable transactions in our in-line network and even growing transactions in our drive-through networks, so that gives us reason to believe that, basically, people do not visit as much as they used to visit the malls, which results to decreased transactions. Checking with competition or the market, the same thing is valid for all -- for many, not all, we didn't check with all, but for the many brands and networks that we have communicated with. This is for -- but -- however, in any case, with KFC, we managed to have very healthy sales due to our product management efforts and to our sales price increase as well. Going further to Pizza Hut, it was another difficult year. I'm proud of the team and what they did in terms of restoring sales. You can see that the upward trend on the right part of the page, on the right diagram, with the same-store performance. Obviously, no new stores. We just had more -- 6 stores operating from October from 2018, that's why you see some incremental sales coming from new stores. This is a very difficult operation. We're still in negative numbers and we are in discussions with Yum! on how we restore this, and I will give you further insights in the end of the presentation. Clearly, if I can say something in terms of what the focus should be in this business, it's the delivery business, the delivery part -- delivery segment. I can tell you that Taco Bell moved as we planned it to move. We're very happy for its operations. And I'll tell you in the end, in terms of future development, we are about to sign a new development agreement with 4 stores per year, 10 stores in the next 3 years, actually. And we are already undergoing this development, and we are very happy to go forward with this brand. In terms of development, the highlight is exactly as I've said. We planned 24 stores, we did 16. The KFC Romania is just purely a delay. All of them will be covered -- the 2 of them will be covered this year. Pizza Hut, no development. The main delay came from Italy. As -- I can tell you, as we speak, that we will be -- we have opened one, and we'll be opening another 6 before half year. And the plan would be 9 to 10 stores, so we will be recovering the 2019 lost openings in 2020. The -- I will pass it over now to Monica for giving you certain operational highlights, mainly on our products.

Hello, everybody. I will start with marketing on KFC Romania. As Georgios mentioned, quarter 4 was more challenging than the others in terms of sales and transactions. However, we managed to finish the year and also the quarter with strong same-store sales numbers. So we continued our effort to build the brand over time and sales overnight in. Towards the end of the year, we had 2 campaigns in parallel. One was an innovation campaign focused on our product called Double Down, which is a differentiator in the fast food sector, that's why we chose to launch it. And in parallel, we built -- we continue to build on our sharing occasions with our iconic product, the Bucket. This time, we promoted the Christmas Bucket. So those 2 campaigns delivered sales and also built on our strengths. Also we focused -- and we said this in the past, we focused our communication efforts on the delivery channel since it is a very important growth player for us. And we opened more cities to delivery, so at the end of 2019, we cover all of Bucharest with delivery and 8 cities in the provinces. We have 2 delivery models. In the capital, we have own delivery. And in the province, we have -- we do delivery through aggregators. We also continued to improve technology in our stores, and you've heard this already in past calls. We have self-ordering kiosks and digital menu boards in our stores for an improved consumer experience. And we added more stores with kiosks and delivery menu boards. You have the numbers on the slide. And we also opened our 80th store in Romania during Q4. So we decided to utilize the moment to increase online conversations, but also attract new consumers to the brand by having a promotion for the -- called 80 reasons to be authentic. So this is for KFC. Moving on Slide 12, Pizza Hut. Again, as Georgios mentioned, quarter 4 was a very strong quarter for Pizza Hut in terms of sales compared to previous quarters and, obviously, previous year. Again, we focused on differentiating ourselves from the competition. And we had a winter campaign for both channels, dine-in and delivery, where we promoted a very popular and iconic product for us, called Cheesy Bites, which builds both on sales and relevance for the brand. We also -- we also saw an increase in the delivery channel. In our online orders, we had a historical high in quarter 4, 55% of our sales coming through online orders. And we finished the year with 51%. And this is a combination of online orders coming through our own channels, but also through aggregators. In terms of Taco Bell, again, a strong quarter. For Taco Bell, we are focusing on building our brand equity and, obviously, top line sales. We opened 2 (sic) [ 3 ] more stores this quarter. And we had an innovation campaign around the craveable taco, called Chalupa, which again helped both same store and also all-store sales. On Page 13, you have a few highlights, images of the campaigns I mentioned. And then on Page 14, since it's the end of the year, we felt that it's important to highlight our CSR efforts this year. And we chose the 3 most important ones, they are recurrent events. One is for both KFC and Pizza Hut restaurants. We have a collaboration with World Vision. It's our 12th year when we do this. It happens every October. With the help of our consumers, we raise money for kids who want to continue their education and we help them to go to high school. And this year, with the amount raised, we are able to help 200 kids to move from elementary school to high school, ninth grade. Another CSR campaign that we run yearly is in collaboration with SOS Children Villages. These [ kids ] haven't seen the KFC stores. It's called Bucket for Good. We donate RON 1 from each Hot Wings Bucket sales. And we are helping us with Children's Villages with their houses, we adopted 2 of their houses this year -- last year, 2019. And again, we help kids to stay in school. And the third CSR campaign is called Harvest. It happens in KFC restaurants -- selected KFC restaurants. And we have a soup kitchen with food. So this is for the CSR for 2019. And now I'm taking it over to our CFO, Valentin.

Hello, everybody. Slide 16, we have the overview of the P&L for full year 2019. Restaurant sales, RON 955 million and EBITDA RON 153 million, with a normalized EBITDA level of RON 145 million. These figures incorporate the impact of IFRS '16. So I will remind you that starting with 1st of January, the IFRS 16 is in place. And because Sphera used the modified retrospective approach for the transition to the IFRS 16, this will -- is not resulting in comparative amounts from -- for the previous year. So that's why, on Slide 17, the next one, we have a visualization of the effect of IFRS 16 on our P&L. So from -- from RON 152 million EBITDA, we go to RON 104 million. The effect of RON 59 million of IFRS 16 is coming, as you can see, mainly from the rent line and with the corresponding effect in the depreciation and, obviously, in finance costs. So now I propose to go to next slide, Slide 18. Here, basically, we have the image comparable, like-it-like, for both 2019 and 2018. It's IFRS without the new standard. And we can mention the evolution of the sales, which is up with 23.8% year-on-year, reaching the level of RON 955 million, as stated before, a performance that was shared by KFC Romania and Moldova with plus 16% year-on-year, which is 12.1 percentage point contribution, and also by significant contribution of KFC Italy, 7.8, and last but not the least Taco Bell, 2.7. Restaurant operating profit is up 20 -- almost 21% year-on-year with the margin slightly down 0.4 percentage points, from 13.4 to 13, the weight in sales, especially because of the labor, which is 1.6 percentage points and other operating expenses with 0.8 effect. We managed through the cost of food to improve with 2.3 percentage points. G&A expenses is down, as you can see in the table, it's 31% year-on-year, reaching 5.2% of sales. However, the normalization of RON 8 million, we can see an EBITDA, it's coming from this line of the P&L, the G&A line, entirely. As you can see in the footnote, the normalization is the net result of a positive effect generated by the reversal of provision of RON 10.3 million in relation with the Romanian Fiscal Authorities and the negative effect of RON 2.4 million related to the impairment provision of the goodwill. Similarly, for 2018 EBITDA and, respectively, G&A as well, we have a RON 20.7 million, so RON 21 million, normalization level. In conclusion, the like-with-like comparison of the G&A shows us a significant improvement from 6.8 to 6.1 weight in revenues. Normalized EBITDA up to 32.7% year-on-year, which means a 0.7 percentage points to 10.1% margin level that Georgios was mentioning in the beginning. Excluding the KFC Italy and Taco Bell, which is, let's say, our mature business line, we have EBITDA margin would have been 0.6 percentage points higher, which give us 11.5 margin for 2020. Net profit is up 164%, having a net profit margin of 6.7% in 2020. I'm going now to Slide 19, where we have a similar analysis quarter-on-quarter this time, so quarter 4 '19 versus the same period of '18. Sales still up 18.6%. Again, the triggers are the strong position of having KFC Romania/Moldova, and it's followed by Italy and Taco Bell. Restaurant operating margin is up 26.1% with a margin up of 0.8 percentage points, from 13% to 13.9%, helped by the lower cost of food, which contributed 3.5 percentage points. G&A is down. Here, I will mention as well the one-off effects of the RON 8 million, which we discussed previously. This had the impact quarter 4. And the G&A without this stands at RON 15.8 million. This means that a weight of 6.1% of revenue, compared with 6.4% in quarter 3, i.e., 0.3 percentage points better performance versus the previous quarter. And regarding quarter 4, the similar period of 2018, the G&A of RON 35 million has a normalization level of 15.6, which brings us to a ratio of 7.1% of revenue. So it's higher with 1 percentage point with the current level of Q4 2019. Next slide, Slide 20. We have in the left top corner the restaurant sales year-on-year growth with a level of 23.8%, 24%, which is lower than the budgeted level of 28.8%. The negative delta, as stated again in the beginning of our presentation, mainly due to the delay in recording openings. However, if we are looking to the bars on the right table, we can see the evolution of the restaurant operating profit margins. Here, we have a full year margin of 13% versus the budgeted one of 12%, so better in terms of operating margin. On the corner left down, it is the illustration of the normalized G&A evolution that I mentioned before. Here, we can visualize the improvement from 6.8% in '19 to 6.1% in '19 -- 6.8% was in '18, almost in line with the budget level of 6%, so it's very close to the level we have envisaged. And finally, in the right corner down, the evolution of the normalized EBITDA margin. We can see here the Q4 with 11% being our second best quarter in the year after Q3. And of course, the full year of 10%-plus versus 9.7% as per the budget. Slide 21, and I can say together with Slide 22, show us the components per our brand, with and without the IFRS 16 adoption impact. It's valid for both slight EBITDA positive for each business line we'd have. Solid year-on-year sales growth for all companies, you can see in the bridge below, in the bars. As [ the LRC ], of course, KFC Romania was [Foreign Language] which is the name of the leader company, the first one, being followed by Italy, then by Pizza Hut in Italy and Taco Bell. And on Slide 23 and 24, I will go very fast. It is the breakdown of our operating expense. So it's a focus on the restaurant operating profit. We have the analysis per full year and per quarter. In the table above with IFRS 16 and the table below without IFRS 16. It is the summary of what I mentioned earlier, basically, the better performance recorded in the food and materials, in our COGS, with the effort coming from the payroll and employee benefit line. On the Slide 25 is the G&A expense. Again, we can see the details below the G&A. This was not visible until now. This is the components with employee benefits, third-party expenses, rent, banking charges, transport. And the figures are before the normalization that I described to you in the slide before. The last one, Slide 26, shows us the financial position. Here is the information of the noncurrent asset of almost RON 11 million from euro, with the current assets slightly decrease of EUR 1.7 million, giving a total asset better with EUR 9 million. The debt, it's going down, from EUR 26 million in '18 to almost EUR 23 million in '19. And the cash position has decreased to RON 57 million. Basically, we have utilized more our cash -- the correlation between these last 2 lines. So this is all for the financial side. Thank you.

All right. Any specific questions about any reconciliations, please keep them -- for the financials, you can keep them in the end. And I'm sure Vale will give you full explanations. Now a view to the future, this is just a direction. I will not give you specific numbers as we do not have our budgets approved yet. As a group, we will keep on focusing on profitability as we did this year. So -- and we managed to achieve a certain cultural level of this being our top priority. We will still continue growing and developing further stores. I will tell you more by brand. And a great focus on finalizing our core systems, which is the cornerstone of our transformation of the business, i.e., the ERPs, as I said to you before, but also the process reengineering that this carries underlying. This will be combined now, also with certain new policies from procurement policies, staff handbook, all the other governance elements that will allow us to be unified as a group. Now more specifically by brands. For KFC Romania, we will keep on growing at the rate of 9 to 10 stores most -- and potentially one more in Moldova. Here, the focus would be -- our focus would be on maintaining transactions. One of the ways to do that is our development is mostly based on drive-throughs now and -- so that we can decrease the dependency on the mall operations and situations such as the coronavirus, but also achieve longer-term stability in terms of transactions and high revenue per store. We will base a lot on smart value propositions and then also we will initiate and extend our delivery part of this business. We believe that all of the above will allow us to maintain transactions at a high level, and -- which will not force us to impose significant price increases for next year. For Pizza Hut, we are in very close cooperation with Yum! to reshape the future of this network. For this, for next year, we will close a couple of stores. We will transform a couple of stores to Pizza Hut Express, which is the concept we will pilot and test next year. We will also open 2 Pizza Hut Express Stores within the Petron gas stations, which we expect to be the train of growth of this brand for the future, assuming successful operations. Overall, and more in the future, we'll be looking to reshuffle, restate our network in such a way that will enhance the delivery part of the business and restore profitability per store. For Taco Bell, we have already agreed the new development plan, which will be 10 stores for the next 3 years. Similar initiative -- incentives that we had the previous -- in the first 3 years plan. And this is a growing -- business is growing healthy. It's growing in accordance with all the plans we have and all the metrics we have from the business from Yum!. And we expect it to contribute next year to our profitability as well. Now with Italy, the plan is already undergoing for 2020 with, again, around 9 to 10 stores. Seven will be probably opened -- most probably opened by half year, they're already being built. And another 3 -- 2, 3, 4, depends on the capability of the locations by the year-end. As you can see, this is a much faster throughout-the-year deployment, which we expect to help a lot as compared to this year in terms of the total revenue contribution. Further plans in Italy are being, again, currently discussed with Yum! based on the evolution of this year's network, not only by us, by other franchisees. Very recently, the operations of Italy are under now the same management that our operations in Romania are, which gives us an improved communication with the whole Yum! system. This is the future look. Now we are ready to take your questions.

[Operator Instructions] We have 2 questions on the line. Our first comes from Catalin Diaconu of Raiffeisen Bank.

So I have a question regarding margins. So we saw another quarter where EBITDA margins adjusted for any kind of one-offs or IFRS 16 were once again in double digits. Is this a sustainable trend also for 2020, given that you plan an increased number of new openings?

I would say, high-end single digits, we will keep on -- we will try for sustaining the results we achieved this year. Sincerely, this coronavirus is puzzling me. It's a global -- it has a global effect. And we have a highly dependable network on malls. And if this affects people gathering together significantly, it will have an impact in our business. But at this moment, we cannot assess it. In any case, we will be constantly working in adjusting costs accordingly so that we can maintain our profitability levels.

Our next question today comes from [ Mattheus Sina ] of [ Barron's ].

A quick question from my side. I've got 2 questions. The first one would be straightforward on imported labor. Can you elaborate on that a bit and explain to me kind of what kind of really room you have on that -- on efficiency with regards to imported labor? Also where do you import labor from? That would be interesting, too. That's the first question.

Well, this is, in our case, this is the first time we did it. This is -- this has become quite common in the market, not so much for networks like ours with 4,000 employees in the stores or 140 restaurants. The experience of the others is very positive because the people coming here to work, they are very focused on their job. And they -- by the mere fact that they remain in the business for 2 or 3 years, they get the expertise to really operate efficiently. We, as the first instance, we piloted with 75 people coming from Sri Lanka. There are many services in the market. There are people -- offering people coming from Albania or other markets. We -- Nepal. We opted a cooperation based on cost, but also based on their capability to sufficiently and properly host these people. So we investigated all their infrastructure and all their facilities they have because we wanted to make sure that we are not going against our sustainability profile. I don't have the answers for how it will work. We piloted, that's why we go only to 75. The cost will be a bit higher -- it's higher than our current personnel. If this is successful, we may go up to 400 to 500 people, given the gaps we have now in our stores. And by the way, this is going also to more specific locations, which are suffering more from the insufficient labor in the market.

So it's also -- so I understand, that would mean it's also consumer-facing, right, drops? If it's 400 to 500...

You were saying?

This would -- the number that you named, 400 to 500 -- potential up to 400 to 500 would mean you use this imported labor also on -- in consumer-facing roles, like on the table?

Yes, it's mostly kitchen, but we will, if the time comes. For the 75 people, not yet, no. But yes, we need to pilot it. We need to see how it works, and then we will do a more bold move. We can't -- I don't -- we don't feel comfortable in going with a big number now and we would prefer, of course, local labor.

Fully understand. Just -- and the interesting part that I want to just follow on is also that you, per se, do not expect efficiencies in terms of cost, but you do expect higher productivity, i.e., transactions? Is this correct?

Absolutely correct.

Turnover, basically, the stability of 2-plus years will have a positive effect in turnover and efficiency.

Understood. And the second part is, of course, related to coronavirus, and thank you that you already elaborated on that. But am I right to say that the recent outbreak in Italy is in your franchise region? Is this correct?

No, not exactly. It's in Milan area, it's Lombardia, but both of our regions are close. So both in Veneto and Piedmont is close. Actually, if you look at it in terms of transportation, the one which is farther is more affected because most of the -- the heavy transportation is between Lombardia and them. Yes, we saw -- the last 3, 4 days, we saw significant drops. Again, we are more in malls. If they take actions of even closing the malls down for a period of time, we will definitely see negative results. At this point, I cannot assess it at all.

Okay. And sorry, I have one more question that came up -- that came to my mind during the presentation. I was a bit surprised how well contained the cost of goods sold are, especially in terms of food. Can you -- is that -- would you say that there were significantly -- significant improvement on that front, probably in the mix -- sales mix? Or am I seeing this wrong and it's just a normalization of the high food price inflation that we have seen in the past?

You want to take it over. This is a combined factors. Please, Vale.

Basically, here, we managed to have some good deals on some bigger elements of our structure of cost, but also it took benefit of the dilution of the ratio in terms of margin because of the price increases we have performed. And we foresee without any totally unexpected effects like this coronavirus sort of who knows what pop up in terms of extraordinary things. We see it able to be maintained to the current level. But again, without any extraordinary effect.

Our next question today comes from [ Lucian Albuse Lesco ] of [ Apos Securities ].

I have 2 questions. So first one, I remember in the last call, you were mentioning that there is a possibility of further impairments in some of the brands like Pizza Hut. So for these preliminary results, are the brands already tested for impairments? And do you think there is -- this possibility of new impairment is still valid, if not for this year, for the coming years? This is the first question.

So I will take it. The current preliminary financial statement presented incorporates the effect of this impairment. So we have for the Pizza Hut brand for the investment side an impairment in the stand-alone that are in the amount of RON 15.5 million. And in terms of consolidated IFRS financial statements, we have recognized an impairment of goodwill in amount of RON 2.4 million. Again, related to the investment in Pizza Hut United States. Just to refresh your mind, the -- only the impairment in -- of the investment is basically affecting the stand-alone financial statement, financial statements that are the engine of the distribution of dividends and the profitability of the group.

Okay. I see. So basically, this means -- the next question, which was related to the dividends. If you already have some guidance for what you intend to pay.

We do not have any official decision yet. But clearly, there will be more than what we announced last year. We -- as you are aware, we're already giving a first cut. I mean what is it, Vale? 13 million in come March?

Yes, the last year.

Coming from the previous year. And this will top up whatever we will distribute from 2019.

All right. Probably we will -- yes, we will find out the results when you will publish the call for the shareholders' meeting, right?

Yes, there are 2 shareholders -- we have -- we're going to have another one coming March.

This is referring the 13 million from 2018. And I think you are referring to the one-off approved in financial statements.

2019 April will be the one.

To the new one, yes.

The new one, yes.

[Operator Instructions]

[ Pavel from Sterun Company ]. I have a quick question, just to confirm the numbers you provided for the rollout. KFC Romania is 9, 10 new stores in Romania this year, plus one in Moldova. And Taco Bell 10 stores...

Overseas in Moldova, we're negotiating, but we would like to.

Okay. Negotiating. Taco Bell, 10 stores over the next 3 years. And in Italy, 9, 10 stores this year.

Yes.

Our next question is a follow-up from Catalin.

Yes, I have a follow-up on the dividend. So back in the day, we knew that there was like a 2-year lag between earnings in the stand-alone or in the subsidiaries and the dividend distribution. Was this legal problem resolved in the meantime? So can the holding company distribute dividends directly from 2019 earnings right now?

Yes, I will try to explain this. You are very right. This happened in the beginning due to the structure. Basically, after this lag in terms of capability of distribution, now we enter on a normalized, basically, activity. We can distribute from one to the other here. The '19 performance that we are speaking of Sphera, which can distribute dividends, incorporate the dividends distributed by KFC of '18. So in substance behind, there is a time lag. But you cannot feel it because, from year-to-year, we have the capability to -- we have continued in this respect. I don't know if I was clear. So the performance of Sphera standalone, which is the one distributing dividend, incorporates revenue from dividends received from KFC, dividends attributable to the fiscal year of 2018. Is it clear?

Yes. So let me put it in other words. So basically, what you -- you plan to distribute right now in March are the earnings generated back in 2017 in the subsidiaries post in 2019. And now you'll basically distribute the earnings from 2018 from the subsidiaries, right?

Exactly, which is the financial statement of the holding co of '19. Yes, very bright.

We have no further questions on the line, so I'll hand back for any final remarks.

We want to thank you for your attendance. We thank you for all of your questions. And we're looking forward to another successful year and to face all the challenges that are coming either from China or anybody else in the world.

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