Trellidor Holdings Limited (TRL) Earnings Call Transcript & Summary

Good morning, everybody, and welcome to the Trellidor Results Webinar for the Year ending June 30, 2020. Terry Dennison, CEO; and Damian Judge, CFO, will be taking us through the results, which will be followed by a Q&A session. [Operator Instructions] Thank you. And Terry, over to you.

Thank you, Riaan. And good morning, ladies and gentlemen. Thank you for joining us today, and thanks to PSG Capital for hosting this webinar. Well, impact of the national lockdown. I would imagine every company that is presenting results has got a whole lot to say about what happened in the months of April, May and June 2020. In our case, as a result of the national lockdown, the group focused in on cash preservation, sustaining our core business streams. These being our staff, our routes to market and our key suppliers. Our staff were placed on leave, on paid leave for 2 weeks and then allowed to work from home wherever possible. You would appreciate in a lot of cases, that wasn't possible, particularly for our staff that are factory-based. And government's assistance by way of TERS was well managed. And we certainly appreciate the efforts that the government put in through the UIF to facilitate the TERS process. And in our case, it's been a very good experience. I know that there are some bad experiences, but in our case, certainly a very good experience. We also, in addition to that, offered our staff a loan as a percentage of their take-home pay to tie them over until things returned more or less to normal. In the case of our key suppliers, they were paid in full in both April and May as part of our strategy to sustain their businesses and make sure that they were able to supply us in the medium term. And in the case of our route to market, where our franchisees and key distributors, we've offered them extended credit terms, also to keep them afloat and able to get back up and running as conditions return to semi normal. At the 31st of March 2020, 4 days after the national lockdown, our group cash resources stood at ZAR 25.6 million. The group was unable to tread in April at all and was severely restricted in May with the social distancing provisions, hampering bring the number of staff that were able to return to work. And gradually, conditions improved through June as Level 3 was implemented by the government. Based on deficit to our internal forecasts as a result of the lockdown, ZAR 72 million of revenue was lost during the period, and it's translated to a reduction in HEPS of ZAR 0.22. In order to mitigate the impact of the significantly reduced performance, cash conservation strategy was successfully implemented. We postponed the interim dividend declared in March 2020. I think it was literally a week after we did our interim roadshows that lockdown was announced. But as at 30th of June 2020, our group cash resources closed on ZAR 16.1 million, which I think was a very good results, given the severity of the lockdowns. These have now increased to ZAR 31.3 million as at the end of the 31st of August 2020. Our route to market remain robust, and no franchises have had to close their doors as a direct result of the lockdown. As a reminder, our strategic objectives for 2020 were as follows: to continue with the share buyback program; to optimize our balance sheet by increasing gearing to finance long-term organic growth; ongoing focus on cash generation and return on invested capital; enhancement of our route to market in South Africa and abroad to facilitate growth; improving our operational efficiencies and active cost management within the group; and the introduction of new products, both locally and abroad, and then COVID hit us. As a result of that, we then reprioritized our strategies through the second half of FY '20 to focus primarily on cash preservation and generation; reducing our costs in both the short and medium term to respond to the weak economic conditions that are assured to prevail; and the introduction of new products, both locally and abroad, albeit delayed from original plans; continue with our strategic investment in selling capacity to respond to changing consumer behavior, again both locally and abroad. With regard to reducing our costs in the short and medium term, operating costs were reduced on a year-on-year basis by 8.4%, which certainly helped us survive through the severe lockdown period. Subsequent to year-end, the group has implemented a retrenchment program, which is planned for completion in half 1 FY '21. The introduction of new products, both locally and abroad, has been delayed, as previously mentioned, to half 2 F '21, but both business segments are planning to launch new products through the 2020 calendar year and into 2021. Our strategic investment and selling capacity in response to the changing consumer behavior, sale and purchase agreements were completed to acquire 3 franchises in the Durban metro area, and that was concluded early in half 2, just prior to lockdown. I think what's pleasing to report is the performance from June through to the end of August, showed an improvement, strong improvement actually, year-on-year in these areas based -- against the FY '19 year. In addition to that, despite the lockdowns, throughout the world, in fact, we achieved sales growth in Africa of 7%, which is an exceptional performance given the circumstances. And during the lockdown, virtual sales tools, digital sales tools, trying to do the sales process through a cellphone, a smartphone or a PC screen to mitigate the fact that we were unable to travel to clients' premises, we implemented with varying degrees of success. But I think there's enough excitement there for us to continue investment to that into the future. And then finally, an expression of interest for the purchase of the Trellidor U.K. franchise was entered into before year-end, and we're currently in the process of completing due diligence. I think the reality is changing consumer behavior is a real thing and has changed quickly through the result and lockdowns from the pandemic. And our constant need to improve efficiencies must be responded to. The acquisition of key retail territories, in our case former franchisees, gives us the platform to adapt and experiment with new tools and methodologies. The early results have been exciting for us. And as we prove these methods, they will be extended to the broader franchise base and distribution base of the business. And our prospects, I'm sure shareholders will be happy to hear that the delayed FY '20 interim dividend will now be paid through October. But no final dividend has declared for FY '20. On the share buyback program, we continue to believe that the current share price undervalues the business. And once we're comfortable that cash generation's stabilized, we will continue to apply excess cash to buy back shares. Enhancing the route to market, the launch of the Durban sales branch, which was only really effective in June 2020 to drive sales growth, including the focused integration of the Taylor products in the area is a key focus, and the early results have been very encouraging. We're anticipating conclusion of the acquisition of the Trellidor U.K. franchise, which should aid the business through the course of FY '21 and onwards. In terms of improving operational efficiencies and cost management, we anticipate that the weak economic environment will continue. And as a result, tight control of operational costs has to remain a key focus. In that regard, we're anticipating completing the retrenchment program through the course of half 1 FY '21. And as now -- as a new innovation to our route to market, we are implementing a lower cost agency program to enhance the existing franchise model in selected regions where it makes sense. I think pleasingly, our trading results in July and August being the first 2 months of the new financial year have surprised us on the up side. And I don't think it's unique to our business. I've certainly spoken to a number of other businesses in the construction material sector, who seem to be experiencing better results than they anticipated as well, long may it last. In that regard, the Trellidor segment sales have exceeded the prior year sales by 7% on a like-for-like basis, and the Taylor business is trading on par with the prior year. And the cash generation has been exceptionally strong in the business over the 2-month period with a ZAR 15.2 million additional cash generated for the 2 months. That said, while we're very happy with trading since June, we remain cautious and anticipate that pressure on disposable income in our target market is a real factor going forward. There is however a school of thought and -- that with consumer behavior changing, given the pandemic and the lockdown and more time being spent at home, that spend will be targeted in the home environment rather than elsewhere. If this proves to be the case, our group should benefit. In summary, the group remains focused on its core growth strategies, which the Board believes will position it to benefit from, hopefully, future improving economic conditions, these being brand leadership, so continued investment in the brand; diversifying product range, so continue investing in product development; distribution enhancement; growth in South Africa, Africa and the U.K.; and improving our operational efficiencies and margins. Now I'm going to hand over to Damian Judge, our CFO, to take us through the group's financial results.

Thank you, Terry, and good morning to everyone who has dialed in. As Terry has mentioned, the group performance has been significantly impacted by COVID. We achieved close to 0 sales in April. And as a result, revenue was down 18% to ZAR 422 million in 2020. The impact on the top line has had a knock-on effect on GP as well as the under-recovery of fixed and semi-variable costs. This is highlighted in the decrease in gross margin from 45.0% to 41.6% in 2020. Included in EBITDA is a ZAR 37.4 million impairment of goodwill in Taylor, as a result of the significantly reduced performance in FY '20 and the conservative forecasted recovery through to FY '23. As additional information, we have included headline EBITDA, which is EBITDA adjusted for the ZAR 37.4 million, being ZAR 49 million. Dividends paid during the year was limited to the FY '19 final dividends declared. In line with the group's cash conservation strategy, the FY '20 interim dividend payment, which was postponed, will now be paid in October. And no final dividends has been declared. Earnings per share is significantly impacted by the reduced performance through quarter 4 and the results in goodwill impairments. HEPS, which is adjusted for the impairment, is pulled down significantly as a result of the lockdown, which we forecast has reduced earnings per share by ZAR 0.22. Also worth noting that the adoption of IFRS 16 in 2020 reduced earnings per share by a further 0.9% -- ZAR 0.09 per share. Following the buyback and cancellation of shares in December 2019, shares in issue have reduced to 100.2 million shares. And as a result, the weighted average has decreased from FY '19. As Terry has mentioned, we've -- our internal forecast indicate that COVID has cost us ZAR 72 million on the revenue line. And as a result, group revenue is down 18% year-on-year. The decline highlights the importance of the strategic investment in selling capacity and strategies that we've implemented and hopefully responding to both local and global changes in consumer behavior. EBITDA has declined mainly due to the low volumes through the tough economic conditions and the ZAR 37.4 million impairment of goodwill. Some of the mitigating factors, which we implemented across the group, was obviously the tighter cost control, and excluding impairments, operating costs decreased nicely by 8.4% year-on-year. Interesting to note that at half year, we are reporting a 1.5% increase in operating costs. So this is a good performance in H2 in response to the lockdown. Further interventions, which we are looking through -- implementing during F '20, F '21, was the centralizing of the accounting ERP system to improve costs -- improve controls and lower costs, consolidate our regional branch operations, and an updated version of the Trellidor bespoke production and cost system has been implemented in both Trellidor and Taylor. Our debt-to-equity ratio is up to 61% from 35% in 2019. This is on the back, mainly driven by a 26% increase in debt year-on-year and a 29% decrease in equity as a result of the current year loss and the share buybacks. The debt-to-EBITDA ratio of 8.6x is up from 1x in 2019. But if we exclude the impairment, that ratio improves to 2x. Interest-bearing debt is up to ZAR 99 million from ZAR 79 million in 2019. Reduction in inventory is in line with our strategic objectives to reduce stock holding specifically in the Taylor business as part of our net working capital controls. We've seen that a decrease in receivables line, which is in line with the reduced trading in quarter 4 FY '20 and payables year-on-year declined in line with the stock reduction strategy. Pleasing to note that despite the loss the group has reported for FY '20, we're still seeing some strong cash generation throughout the year. Free cash flow is only down 10% from FY '19 despite revenue decreasing 18% year-on-year. In terms of capital allocation during the year, our return to shareholders is focused on our payment of our final F '19 dividend of ZAR 12 million and the ZAR 22 million spent on share buybacks in December last year. In terms of debt servicing, we've paid down interest-bearing liabilities before we refinanced of ZAR 13.8 million as well as -- and which was assisted by capital moratorium from FNB to assist us through May and June during COVID. We also settled net interest of ZAR 6.8 million. From a CapEx perspective, we've been slightly quieter this year, following a big investment in the Trellidor businesses previously, in line with depreciation, we spent ZAR 5.8 million on CapEx. As Terry has mentioned, we invested in 4 key franchises during the year, which allocated ZAR 11 million of capital. And looking forward to FY '20, our key capital allocation was focused on the payments of the interim dividends of ZAR 0.08 per share, which was postponed in March and we'll pay that in October. We continue to see the value in share buybacks, given the low price currently. We've -- as Terry has mentioned, we have the expression of interest in the U.K. franchise, which has been signed and due diligence is underway. We've got no real major CapEx planned during the year, and that investment should remain in line with depreciation. Moving on to the segments. And we'll start with the Trellidor business unit. Overall, Trellidor revenue has declined 20% across its markets, mainly on the back of the lockdown, as we said. Despite the COVID disruption, we still saw a strong performance on the African continent, with sales growing 7% year-on-year off a strong base in 2019. There was weaker performance in the U.K., which is also coming off a strong base in 2019, but had COVID impact both from a South African supply perspective as well as in-country disruption. Overall, our outlying regions in South Africa continue to make up the largest contribution to the Trellidor sales. Our product offering continues to mitigate some of the risk across the middle and upper income classes. Our product mix has continued to remain fairly consistent with prior year. Although it is pleasing to note that our Rollerstyle product range, which showed some increase in contribution at half year, maintain that contribution growth through to the end of 2020. Our reduced trading has obviously had an impact on our margins, especially on the fixed and semi-variable costs during the lockdown. Our under-recovery is highlighted by an increase in wages as a percentage of cost of sales. Pleasing to note that our material decreases have been well managed, which is a specific strategy, which we've been implementing during the period. Moving on to the Taylor segment. COVID has had a significant impact on the Taylor business. As part of our annual impairment test of goodwill, we've had to be conservative in our forecast, given the uncertainty around COVID and the overall weak economic environment. We have forecasted revenue in Taylor to be subdued through FY '21, only growing 1% year-on-year. Better performance is anticipated in FY '22 with pre-COVID performance levels returning in FY '23. As a result of this conservative forecast, an impairment in goodwill of ZAR 37.4 million has been adjusted in FY '20. From a sales perspective, Taylor is reporting at a 14.9% decline from FY '19, driven predominantly by the lockdown. At half year, Taylor was 1.3% up on revenue against F '19, but because of the lockdown couldn't capitalize on that position, unfortunately, and the Western Cape continues to be the major contributor to sales. Turnover is well spread again across the product ranges. But we have seen a nice growth in the blind sales, particularly roller-blinds, in terms of their contribution to overall sales. Also pleasing to note that our NMC product range, which was significantly impacted during the lockdown because -- from a construction perspective, at a 2-month lockout, only reported 8% down on prior year and had a strong growth into 2021. Cost measures in the Taylor business have been implemented successfully, but unfortunately were negatively impacted by the lockdown. Group buying strategies have also been implemented and savings were expected through the course of half 2 2020, but before the COVID impact, so we expect to see those improvements coming through in the FY '21. Some of the additional information, which we've included in your presentation, a bit more detailed on our group's summarized cash flow. And the improvement year-on-year from F '19 is mainly as an impact of the postponement of the interim dividend, but it does highlight the success of some of our cash conservation strategies we implemented during the lockdown. We've also included our group's summarized balance sheet, which highlights our decrease in inventories year-on-year, as well as receivables in line with the lockdown and the management of our payables in line with our stock strategy. We have also -- it's important to highlight the recognition of right-of-use assets this year as a result of our IFRS 16 adoption, which has also resulted in lease liabilities being recognized in 2020. Included in the back is just a breakdown of our HEPS calculation, which talks through the add-back of the impairments of goodwill and the impact of our weighted average shares, which have declined following the buyback. Thank you very much. Back to you, Riaan.

[Operator Instructions] So the first 2 questions goes together. With reference to the retrenchment notes noted, what is the one-off costs relating to these retrenchments and what will be the shift in OpEx as a result of the proposed retrenchments [indiscernible] what is the staff contingence [indiscernible] and advise on how many may be affected by the retrenchment process?

Yes. Thanks for that question. As I'm sure you'll appreciate, formal Section 189 process is a delicate process, and we're in the midst of a second Section 189 process within the group. Currently, we're right in the middle of that process. The outcome of which is subject to the consultations, which are currently ongoing, and it's obviously sensitive. So I'm not really at liberty to talk that through. But we had successfully concluded a Section 189 process in the latter part of FY '20, which has resulted in a reduction in operating expenses of circa 2%. And we're anticipating that we will be able to achieve a cost reduction program of circa another 3% through the current process that we're working in. That doesn't answer your question fully, but I think it gives you a state.

Thank you, Terry. Next question. Can you advise on how much has been spent, intends to be spent on the new digital sales channels?

Yes. We're not talking a major capital investment in terms of creating the tools, because the tools largely exist in our current portfolio, but it's more about the man hours that go into planning content and being able to respond digitally to a client's needs. So it's more a man-hour investment in training and deployment rather than a capital spend. We've got the existing tools. We have adapted quite nicely to the concept.

Okay. Next question. With regard to the U.K. franchise, how large do you think the acquisition may be? What sort of multiple is likely -- are you going to finance this with income EBIT? If not, then how would you fund it?

Yes. In terms of the U.K. acquisition in our -- you'll appreciate that the U.K. franchise, Trellidor franchise is a direct -- it's a route to market selling Trellidor products. So any improvement in the U.K. franchise has a double impact. There's an impact on the U.K. business as itself and also on the South African manufacturing business. So it's a key revenue stream to the business that we are seeking to enhance. We believe that there's further upside in the conservative strategy that's been imposed in the past, which is limited to a few key clients. So we're anticipating based on this business as it currently stands that our price to earnings ratio is targeted around about the 5 mark in pounds. And the actual purchase of the business itself is not a -- it's not a large purchase, but we're looking at around about GBP 1 million in total for the business. There is an earnout section that is based on revenue, and in the key plants that will take place throughout the course of FY '21. That said, we're in the final processes of due diligence, that we're hoping to conclude within the next month or 2, and then the deal can be completed. That's still subject to finalization of the due diligence exercise.

Yes. Thank you, Terry. The next question is what was the COVID impact on the EBITDA line?

That's a good question. I'll have to work backwards in my brain. What we have calculated and put through is we believe that the impact on our HEPS was ZAR 0.22. So we can work backwards from there. I've got Damian punching some numbers, and we'll give you a sense, but I'll come back to you on that question.

All right. Thank you. Next question, what and who is your main customer segment? [indiscernible] or business, et cetera? And what is the strategy rationale with regards to the U.K. and Israel?

In South Africa, the group focuses primarily on the residential market, so the homeowner, if you like. There is an element of what we call project work and contract work, which is commercial buildings, office buildings, medical facilities and that type of thing, again, for both the businesses. And obviously, customers will include interior designers, construction companies as well as individuals. So that is within South Africa. That is largely repeated through Africa, where the primary focus is in the home environment. That said, there's a significant stream of business that we get through corporately owned residential environments, large mining companies, large multinational employers and entities, in particular. In the U.K., the focus is primarily commercial in nature, so retail and public spaces. Public spaces, I mean -- the good examples that we've got are projects that we work on with the London Underground system in the stations, and with local municipalities in things like water facilities, chemical plants and so on to prevent access to sensitive areas. And in the retail space, we work with a number of supermarket chains in securing their premises and elements of their premises like their drug stores, their liquor stores and their cigarette outlets. So in the first-world countries, if you like, the market is primarily corporates and commercial and retail. And in Africa and South Africa, by far, the majority of the markets is residential in nature.

Thank you. Next question is what was behind the strong performance from the Rest of Africa? Was there one country responsible for this?

Yes. Number one, Africa is -- remains a key focus of us. It's our key international market. We believe we've got the strong competitive advantage in Africa. We're well-established across 19-odd countries. And we've been well established, albeit on a low-risk basis, on the continent for some time. So our brands are reasonably well known. So we had been developing new territories over the last 24 to 36 months. And some of the benefit that we're seeing in the growth is as a result of those strategies that were implemented. And with regard to concentration in any one country, no, we saw a reasonably strong performance throughout East Africa; throughout the islands, which is interesting because they're tourism best, and that was obviously pre lockdown as well as our branch, which is in Ghana. We also had a solid year. So pretty much throughout the East African market, the East Africa areas and neighboring markets, Botswana, Mozambique, Swaziland, Zimbabwe. Ironically, despite the weakness in Zimbabwe, it remains a good market for us, Zambia, Namibia, et cetera, so pretty widespread throughout Africa.

Thank you, Terry. Next question is the high activity levels post year-end, circa plus 7%, is that all from the Trellidor segment? And are these activity levels associated with any margin sacrifice?

I didn't quite catch the full question, but what I think I heard was the sales performance post year-end. So July and August, is that correct?

That's right. Let me repeat it quickly. So just the sales performance post year-end, is that all Trellidor segment, attributable to the Trellidor segment? And has there been any margin sacrifice on those activities?

Yes. Both business segments have showed strong results, certainly stronger than we anticipated. Taylor is flat year-on-year. And the Trellidor business in -- is up 7% year-on-year. So certainly not what we anticipated, and we're pleased with those results. In terms of margin sacrifice, markets have been competitive. I think there's been -- I think we're all fighting for the bigger deals. So there's been a degree of discounting. But in terms of margin sacrifice, the group has -- one of its key focus is retaining margins. So we have our tools that we put in place, which are not across the board. So we haven't seen a major impact on margin. That said, I think margin will be under pressure going forward, particularly when we start to see the impact of the significantly weakened rand on imported materials. But that applies across the board. Now that applies to everyone in the industry. And we believe we're well placed to be competitive in that environment. So our focus remains retaining our margins and, where possible, improving them.

Yes. Thanks, Terry. Next question. We note the reference to the share buyback. Can you expand on the size of the buybacks and how you envisage the buyback to be financed?

Yes. In terms of financing any share buybacks, it will be through excess cash. Our core at the moment is we are anticipating weak economic conditions. I see the projected GDP decline year-on-year is in the region of between 7% and 8%, depending whose articles I read, and that has got to have an effect on disposable income of our target market. So we are remaining cautious, and cash preservation within reason remains a key focus. So excess cash will be applied to share buybacks. We're not looking to raise debt to buy our shares back at this stage. Conservative approach, but we do believe that there's an opportunity at the current share price levels to acquire some shares. And now that we're back in an open period, we will look to doing that over the next 3-month period. So in terms of quantum, it's going to be based on our assessment of excess cash.

Thank you, Terry. Next question. The appeal to the Judge President on the labor court matter is now outstanding. While provision has been set aside on this matter, what is your expected date on this matter and why has a settlement not sought?

We have a long-standing labor court dispute that's been going and been disclosed in contingent liability notes over the years. There has been some progress in that a judgment has been received, which we are now appealing. And that appeal process is currently being considered by the Judge President and we are awaiting the outcome of that. There is no time line, unfortunately. So it's frustrating that there is no time line. But the actual application is in place within all the legal time lines that are required, and we are waiting Judge President's ruling on the appeal process. We haven't sought to settle the matter at this stage because it is in a process of appeal. So once we hear the ruling from the Judge President and our right to appeal, we will follow the next steps. In terms of the provision, the outcome remains uncertain, and while we are mindful to not overextend our cash resources, no provision has been made in the financial statements, in line with the fact that the outcome is uncertain.

Thank you. Next question. Can you please advise if they're making strides for acquisitions or mergers seeing that it is challenging? [indiscernible] Sorry, that's the first question, just in regards to acquisitions and mergers.

I'm sorry, Riaan, I didn't get the first part again.

Let's repeat that. So the question is, can Trellidor advise if they are making strides for any acquisitions or mergers, seeing that it is challenging?

Okay, yes. Thank you. Our key acquisition activity at this stage is limited to enhancing our distribution network. We're remaining cautious and making sure that our balance sheet remains strong. And so into vertical integration in terms of our own distribution network is where our focus is lying. That said, we remain open-minded to apply time to assess opportunities, which I think may well be attractive given what the market -- the value that markets have driven out of most businesses in our target group. So we will remain open-minded to that and happy to focus time and energy into any meaningful opportunities. But in terms of capital allocation at this stage, we anticipate that, that will be limited to vertical integration in our distribution network.

Thank you. Next question. Regarding the steel industry challenges, the impact on the business and manufacturing of product.

Yes, the steel industry, my goodness. There's a lot going on in the press at the moment. The steel industry is very wide. It's a very wide industry. We -- part of our product in the Trellidor segment, 65-odd-percent of the revenue, 65% to 70% of the revenue is steel based. There is these other metals, primarily aluminum. But on that steel base, it's a pretty specific element of cold-rolled galvanized steel that is used. Metal in South Africa, alkali metal in South Africa, has curtailed quite severely from what we understand production of certain of its steel products. We're not 100% sure what the impact will be on the cold-rolled steel, but we are concerned. And as a result, we've put an alternative supply arrangements importing steel at this stage out of Europe. And we've been able to secure supply, and we have orders on the water on their way to us to mitigate just in case alkali metal is unable to supply, in terms of their current constraints that they seem to be experiencing. So we do have alternatives. There's always a lead time in getting imported product over. But we have acted early and we don't anticipate any break of supply in steel as a result.

Thank you, Terry. That's currently all the questions. [Operator Instructions] There's another question coming in here. Since the products are also linked to security, do you have any initiatives in collaborating with insurance companies to sell the product? For instance, as you should do as a requirement like tracker?

We do work with certain insurance companies, and we have collaboration with one in particular, where we work quite closely. It's been a focus, a revenue-enhancing focus of the business for a long time now. It's not the easiest thing to achieve. But it's certainly -- we believe our interests are aligned with the insurance industry. And we'll continue seeking to improve and better those relationships with a wider base of insurance companies. So yes, it's proven to be very difficult to achieve a meaningful impact on our revenue stream in working through collaboration with insurance companies, but we continue to try. We've been successful with one in particular, and we need to broaden that.

Excellent, thank you. Okay. We've got another question here. [indiscernible] U.K., disposal but how far down the road are you on this sale? No. So I think just other way around in regards to -- it's actually an acquisition that's being considered. If [ the pressure ] isn't the motivation for the sale, what is? So I think the question is just other way around there, just in terms of an acquisition. And I believe that, that then has been answered in terms of the strategic importance of that for the business. So acquisition not being a disposal.

Yes.

Yes, thank you. I'll say then, I'll respond to that, that question has been addressed. Thank you. Any further questions, please. Let's maybe give another 2 minutes for any further questions. Okay. Another question we've got here is, is any of the hierarchy of directors involved in the acquisition of the U.K. company?

Sorry. Sorry, you're breaking up again, Riaan. Can you just repeat that?

Is there any of the directors involved in the acquisition of the U.K. company, I think from...

Director? Did you say director?

Directors, yes.

No, no. Not at all.

Riaan, do you want to get back to that EBITDA decline? Just looking -- if we look at where we were at half year, we were 12% behind on our EBITDA from F '19. And all indications through to March where we were sort of tracking fairly much in line with that. So if we take that as a yardstick, we sort of forecast about -- COVID costing us about ZAR 22 million on EBITDA, in line with where we were at half year on F '19.

Yes. Thank you, Damian. All right, everybody. Seeing that there's no further questions. This concludes the webinar. Thank you very much for your attendance. And the webinar will also be uploaded onto the website. Thank you very much.