CCC SA

WSE:CCC

Earnings Call Transcript 2022-Q4

[Marcin Czyczerski, executive]

We're going to go ahead and run through the discussion of the results for Q4 2022. [Operator Instructions] So Q4 just like on the entire than last year, that was a very demanding period, the industry in which we operate despite the demanding environment, we've utilized our advantages and the opportunities and here are the results.

So we can see that the group's revenue is growing quickly. So our sales per square meter is growing for the 8th time in a row, very quickly. And so we've seen a reduction in costs. We've started to monetize our first technology investments in Modivo [indiscernible] marketplace. So HalfPrice has confirmed its profitability and the scalability of its business model.

And CCC in line with the plan and in line with what we said is optimizing working capital by leaps and bounds. So now let's go ahead and take a look -- a closer look for all of these issues step by step. So we'll start with CCC. So we can see growth in sales density. This is one of the big growth drivers that was defined in our strategy. And so we're consistently and unwaveringly coming close -- coming closer to our omnichannel approach of PLN 270 million. And so we've been improving our results for the eighth time. And so we've improved the results from prior to COVID-19. And so many people are saying this is the last normal year for sales. And so the best year was 2017. So we had the record-breaking November of 2022. And so we posted sales of more than PLN 820 per square meter. And so we have more and more rapidly growing sales.

We have upswing of 81% growth year-on-year. And so e-commerce under CCC represents some 30%. And so that's 10 percentage points more year-on-year. So this is even more than we had anticipated in our very ambitious strategy. And so because we are selling through digital channels, and we're operating according to the conventional channels. We're able to brag with about these results in e-commerce as well as in our omnichannel sales approach. And so you can see our application, which has been downloaded more than 10 million times, and it's now the main channel of sales for online in CCC. So CCC EU as a sales channel is growing much faster than the market. So in 2022, we had some PLN 900 million in sales, and it's grown by some 90% year-on-year. And so it's not something that intends to slow down. So we will continue to roll out solutions -- omnichannel solutions to keep up that pace in CCC e-commerce as well as in the omnichannel approach and across the brand.

And so when we talk about CCC segment and this business segment, another achievement from last year are what we've been able to do in terms of working capital management and improving the turnover ratios. Perhaps this figure is not on the slide, but I would like for you to remember the strongest. This is in our report. So there's PLN 480 million. And so this the number of the day, this is something that is very importance in response to many questions in terms of how the company wants to deleverage itself, what is the situation of the company, so PLN 480 million, that is the response to many of these questions. This is the value by which we've reduced our stock level or inventories year-over-year and so this was last year, higher by PLN 480 million, including what was [indiscernible]. And so this means that we've been able to improve diametrically the structure and the aging structure composition of our stock, and this will have a positive impact on our results in 2023. So it's PLN 480 million, this is the amount of inventory reduction in last year. And so this is the highest level of stock since 2016, that's not something we're looking at, but sales have grown by some 50%. And so we can say that this is a very good result. So you can take a look at sales being up by some 21% year-on-year. And so stock is down by some 32%.

What does this come from? Well, above all, this is coming from the very quality-based fashion product, we have high quality of the parameters of the collection -- so the breadth and the depth.

And so the last but least -- so it's synchronized to the sales calendar. We are not operating the way we used to work. We're working the way we need to work, the way we should work. And that means that we are improving our turnover ratios. And so we've been improved by some 80 days in terms of stock turnover ratio. And so I'm smiling a little bit. So we can say that these parameters can even be improved down to maybe 100 days. So this would be a short-term quarter turnover. So then the results are even better. Why is this important? Because this portrays that in 2023, in terms of our stock and turnover ratio, it's going to be even better because we're showing the average for the full year now. As you hear and you see, we're pleased with this because this basically sets the rules of the game in terms of where we are in the board, in terms of our investments, but also in terms of financing, this is not the end.

There are another few major optimization, things to be done in Q2 related to how we're going to utilize the inventory, the goods between the various stores and channels. We have some interesting tools that are very promising. We see a lot of potential to improve in terms of Modivo and HalfPrice. So the work we're doing there, we'll start a little bit later but we can say that the results will be on par.

And so we were optimizing the capital by speeding up, accelerating the stock turnover ratio, and we've been able to reduce the overall stock by PLN 480 million. In terms of Modivo, we want to set up the marketplace. So that's a key driver. Why? With the marketplace, we're going to be able to extend the breadth of the offer that's very important for e-commerce without having to debit or burden our own balance sheet. And so the marketplace generated some PLN 8 million in GMV. That's not a lot that's year-to-date, but this is more or less what we thought it would be capable of doing in this time period, this is not a lot. But I remember jokes about the first million earned by CCC and e-commerce. And so a few years later, we came from PLN 1 million to PLN 1 billion. But we have the exact sort of same path, time will tell. Of course, we're going to work on this in order to replicate that history.

We're very pleased with the very high growth rate of GMV, so 100% week-on-week. That's -- our partners are using the marketplace to sell and this is the level of weekly growth. And as a result, their interest in this project is also growing. And we can say that the marketplace has achieved its purposes, and that's why been able to extend the offering of Modivo without actually having to put any burden on our balance sheet. We have 110,000 offers. 95% are new products compared to the ones that Modivo had and 20% are in the home and beauty category, which we didn't have in Modivo, but they were present amongst our competitors. So if we look at peer entities, peer groups, so 25% of the business and above. And so you can see -- if you compare those 2 figures, you can see that the business is just getting started. The story is just getting started. And so we're going to expand this project abroad once we can iron out all the details.

And so let's take a look at what's happening in eobuwie then we've talked about Modivo. So across the year, e-commerce multiband, there are a number of challenges during the year. And you'll see that we are the first company that's presenting its results. Our major competitors in terms of a comparable profile, we'll show the results a little bit later, but then you'll be able to see what our growth rate, our profitability looks like compared to others, and that will be the right time -- this will change your optics. But even if we look at this year, the year we've got behind us, we can see that the hybrid stores have proven their merit. And this is a very important distinguishing mark of eobuwie in Modivo against the competition which gives the customers additional opportunities in terms of the reserve and collect, which is some 70% of the sales in stores. And then it's the service, the offering for Modivo and eobuwie and this contrast us to the competition.

And so we can say that sales are up by 40%, and we improved the sales per square meter by several percentage points. And so we want to continue expanding this abroad. We have 3 stores, a couple in Czech Republic, 1 in Romania, and they've got very good sales results and results in general, and we want to continue that just the same way we want to do that in terms of the eobuwie zone within CCC store, and this shows us the ability to create hubs, footwear hubs and shopping galleries in order to multiply the traffic -- customer traffic footfall. And this is something that's working, and we're going to be able to show you that in subsequent quarters.

Let's look at the flagship example of synergy. This is HalfPrice. So HP, that's what we call HalfPrice. Well, it's become -- it was built based on CCC resources. We're utilizing the synergy within the group, a very important aspect of the synergy was and is and probably will be even stronger. The combination of HalfPrice database and as well as CCC have a database. That way, we can double the number of customers, and we've worked a lot on that for many years in CCC. So we have [indiscernible] club members in HalfPrice, and a large percentage of them come from CCC. And we've not reached the [indiscernible] we have 1.5 million. So you can see that 1.5 million club members are generating these results. And so we're not even halfway to where we want to go.

And as a result of this support and the migration of club members from CCC to HalfPrice, so that means we've been able to improve by leaps and bounds the familiarity with this brand, direct brand recognition. And so you can buy your shoes and CCC and then at HalfPrice, you can buy home and beauty and other clothing apparel items. And so we're going to be able to monetize this to an even greater extent later. So the brand recognition of HalfPrice is on the rise. And so we are putting this concept in very prominent places in shopping galleries. So the current brand recognition of HalfPrice is around 50%. And so basically doubled the brand recognition within the period of 12 months, so a high level of brand recognition coupled with a lot of good work done by our buyers to extend the product offering.

This means that we've been able to grow sales by some 40%. And this is something that's driven our very high like-for-like sales results. And so this is up by some 30% in Q4. So there's a lot of potential upside. We see a lot of potential in H1, having in mind the low base from last year. So if we compare the operating profitability from Q3, we have moved into a scalable model, and we can see that the EBITDA profitability in Q4 is moved up -- has moved up, and it's at a very high level of 12.6% and we can say that we don't even have 2 full years behind us from the get-go in this business. And so from the launch of this business, so if you look at what we've done in terms of our sustainability strategy, this is 1 of our obligations.

With respect to all of our stakeholders in the most recent quarter, we focused on basically having basically the sort of close cycle approach. And so circular economy, so you want to give your shoes a second life, and this is something that was launched right before COVID, and we've extended the reach to include all of the stores in Poland up until now. We've collected some 80,000 pairs of shoes and we're giving them a second life. As the name suggests we have DeeZee is going to join a similar campaign run by InPost called EKOzwroty, eco returns. So we'll be reporting on the scope and the depth of information.

And as a result, the CCC Group received the main award for the Best ESG reports in Poland. So for many stock listed companies, this is a benchmark in terms of how reports should be prepared. We continue to tweak it in terms of CO2 emissions. And these are things that are going to enrich it with in upcoming periods. We're on a good path to report CO2 in terms of Scope 3. And this will be something that we'll do in the near future.

Let's discuss the Q4 prelims. And I'll give the floor to Lukasz now to go ahead and talk about our preliminary financial results for Q4.

[Lukasz Stelmach, executive]

Thank you very much, Marcin. Good afternoon, ladies and gentlemen. I'm extremely pleased to be able to present the preliminary financial results of the group for Q4 2022. Let's begin with revenue. So revenue has grown by some 19%. That's a good result demanding macroeconomic environment. And so this growth was done primarily thanks to dynamic growth of HalfPrice in CCC EU. We had a growth in HalfPrice of nearly 150%, primarily driven by more stores. And so we had 152 square meters there. And we've been able to increase the sales per square meter of sales density. So it's been growing by some large percentage [indiscernible] by 58%.

So we can see half of the -- half of our revenue comes from online. So 56% is online sales in the total sales. I want to draw your attention to the -- what's happened with our stock in Modivo. In HalfPrice, we can say that this is growing in line with scalability business, where sales of CCC, we can see the stock is down by more than 30% year-on-year. This is a very good spectacular result, and this confirms what we've been saying for quite a long time that we want to optimize our working capital. And so our position in CCC means that we're in a much better position compared to our peers that are overstocked on the marketplace.

And so let's go ahead and talk about the individual segments of the business. So if we look at CCC, we can say that the revenue is up by 21% despite the fact that the consumer sentiment was not positive, wasn't conducive. And we can say off-line sales up by 11%. What's important, we can say the average monthly sales per square meter is up to some PLN 600 million -- it's up to some PLN 700 million so this is an increase of quite a bit over from 1 year to the next. And we can see that online sales is up by 81%, and we can say that e-comm represents 1/3 of its revenue in the CCC brand.

And what about the gross margin? Well, gross margin, as you anticipated, is affected by the consumer environment. And that means we have a demanding consumer who is focused on looking for promotions. What deserves special mention is what we've done in terms of optimizing because our SG&A costs have improved by some 13 percentage points year-on-year. This is a very major improvement. And so in nominal terms, the costs have fallen by some 3%. As a result, the adjusted EBITDA, adjusted for one-offs is 4x higher than it was last year. So this is a very good result.

How is the Modivo group doing then? So in Modivo, we can see that revenue is also up. It's up by some 7%, mostly thanks to the Modivo brand, it's up by some 42%. So we can say there's very strong competition because there's a lot of goods on the market. That means there's pressure on the margin. And so the pressure of the margin is down by 3.2%, gross margins down by 2%. We had to take a calm view of this. We believe that the overstocking levels on this industry will basically come down in spring and summer collection 2023. And so we have performance marketing is where we anticipate additional sales and there's some other higher costs in retail sales and then also the sales platforms that are more cost. What we should emphasize here is that Modivo has been able to optimize its logistics costs, and it's down by 0.5 percentage points. And so that's a very good symptom.

And so if you look at another segment, which is HalfPrice. Here, our HalfPrice stores, we have more and more new stores. So we have 91 stores now as the network is growing, we can see that revenue is growing. So in Q4, we can see that we had major growth of 148% year-on-year. So monthly sales density is more than PLN 600. So it's particularly important is that we have a high double-digit EBITDA result. And so we've been able to improve it by another 0.3 percentage points so it's now -- EBITDA is now 12.6%. So this is a very good result especially having in mind the fact that this was launched less than 2 years ago.

What are we doing in terms of HalfPrice? We continue to develop the brand. We're improving the product offering, and we are extending the amount of stock, and this means that customers are taking a positive view of it. What portends well is the dynamically growing recognition of the brand, brand recognition. And so we now have some 50% brand recognition of a HalfPrice brand. So as the brand recognition is growing, this means that we're able to think about entering or penetrating new markets. The first market we're planning to penetrate is Latvia. And so we've talked about the segment results.

Now, let's do an overall summary of the group's results. If we look at the group's results and revenue, we can say Q4 was another quarter in which we were able to achieve record -- record-breaking results. So we were at PLN 2.4 billion. So this is 19% growth year-on-year. And that means that we have an additional 1% growth year quarter-on-quarter. And so gross profit is affected by the overstocking in the industry, and we had consumers looking for goods on sale.

And so we can say the first positive signals from the market are freight prices are down by 80% from the peak. We can say that the dollar exchange rate is down by 12% from the peak, and these are a number of factors that are contributing to our ability to gaze into the future with some positive sentiment. Then we also have optimization efforts in terms of HR costs, and we're also saving costs on energy in the overall growth and we're optimizing logistics processes in Modivo. All of these efforts will ensure that our cost stated as a percentage of sales will come down. And this will continue to improve or drive profitability. So we've talked about the segment results and the overall group.

Now let's scrutinize cash flow and look at the debt structure. So if we look at cash flow, what we want to emphasize is we're continuing to pursue a strategy where we will optimize our operational activities. So we want to continue optimizing our stock. And so it's down by more than PLN 450 million, and that has enabled us to finance the growth of HalfPrice. And so we have e-comm being grown and we're optimizing, of course, the store network. From a point of view of cash flow, what's important here is that we are really maintaining strong control, rigorous control over our investment out lease. So our total out lease, we're under PLN 240 million. And so we can say we have some growth in the group of Modivo. And so there's a competitive environment there. And we had lower growth rate of sales compared to the previous quarter in terms of our expectations. And so that means we'll have improvement. Improvement will take place here.

Now if we look at our debt structure. So the debt of the overall group net of Modivo is falling quarter-on-quarter as a result of optimizing working capital in the CCC segment. And this is because we're able to improve the rotation -- turnover ratios of stock. And so that's an improvement of [ 225 ] quarter-on-quarter. And so that's just a very important reduction. We're continuing what we announced in November 2022 in terms of the capital protection plan, we want to improve and strengthen the balance sheet. So we want to issue shares in the CCC Group.

Secondly, we have the possibility of doing some sales back -- sell leaseback programs. And that will continue growing HalfPrice, and we're also thinking about the IPO for Modivo. So all of these potential efforts are on the agenda. We have not foregone any of them any of them. And then we have the convertible bonds for SoftBank. And so the capitalization of the interest is the reason for why we have a change in the debt structure of the group quarter-on-quarter.

And so as a result of the net financial group in Modivo, after adjusting for these convertible bonds, we would have net financial debt of PLN 78 million, and that's more or less it from my side in terms of this portion of the presentation. So I'll give the floor back to Marcin, who can go ahead and sum up today's meeting.

[Marcin Czyczerski, executive]

Thank you very much. The recap will begin by comparing the results we've generated with the assumptions and targets what you've seen previously. And so here are the targets that we've shown you in April and November. Most of our targets or assumptions we made then have been achieved. So the revenue of the growth, we're in the middle of this revised range, so revenue in millions. This is from the most recent conference and the costs of the group are in line with our assumptions from November.

And here again, with normalized revenue, you can see that we're more at the bottom than at the top range. And so then we would have been a lot higher had we had the 2 warm months of the quarter. So Lukasz talked about our activity. And what we've been saying since the beginning of 2022, we believe in our ambitions. We believe that we have strength in our brands, but the trajectory will be adjusted to incorporate what is happening in the marketplace. This is something that's happened. And as a result, CapEx for the overall group.

And in Modivo, we're at the bottom of the range. What was a particular surprise for us this year and for our competitors, not just for us, is the amount of challenges we have in the multi-brand portion of e-commerce. So the revenue growth rate in Modivo, we were able to find ourselves in the middle of this range. So EBITDA is slightly below the lower range because of what's happened at the end of the year, but we can tell you right away, this is not where our ambitions are. And as I mentioned previously, we will work very intensively to ensure that this margin is at a level that we remember from 2020 or better. And so CapEx, I've mentioned already has been adjusted to the market environment. And so it was below the bottom of the range.

So let's take a look at the assumptions we've made for 2023. So we'll start with some external factors which are affecting the industry's results. So Europe has learned to live without Russian resources and energy. So prices are much down. That means there's lower prices for energy. This means there's less inflationary pressure. And that means that the Central Bank policy is changing. We have, of course, spent the disposable income of consumers. And so although we anticipate that the first half of the year especially with Q1, it's going to be as demanding as 2022. We do anticipate that there will be some freeing up of demand later in the course of the year. And so this means they will have an opportunity to rebuild our margins and address our costs, so we anticipate that the footwear market in Central and Eastern Europe will see growth in the double digits, but we'll have some consumer side challenges in the first half.

So that means there won't be a lot of volume growth, and we have similar assumptions for CCC and the rest of the brands. So we'll share some of these economic factors with you a little bit later, but we want to tell you a little bit more in greater detail in terms of what we anticipate and expect of the Modivo Group and how we want to improve its business performance in 2023. We know how important this is for you in terms of valuing the group, putting a price tag on the group itself as an entirety. We understand that what type of pressure this part of our business was subject to in 2022. So basically, it was moving uphill.

So in 2023, as I mentioned, we want to reverse the adverse trends on the business, but we don't want to wait for what the environment will give us. We anticipate real activities, commercial activities, efforts, business efforts that will take jointly with the Modivo Group to achieve these things. We believe that it will and should grow more profitably, more profitably than the rest of the marketplace. This is something that we're going to be working on to achieve.

As I mentioned to you, one of the important elements of this program will be to complete the migration to the new e-commerce platform, making the technological change to the legacy technology. And this is something that's being ramped up now. We'll continue rolling out the marketplace as well as increasing store count and then we'll have advertising services, an important element. Here, we will be the lower competitive pressure in terms of having such a high level of stock. We've talked about S/S '23 being -- should basically rebalance the level between stock and this is something that will happen, the rebalancing of our stock position in the spring of this year to summer. So we believe that we'll be able to step back in terms of our image marketing. And so we'll do some savings that were initiated in 2022.

Let me remind you, we put some metrics on that to the tune of some PLN 90 million over the period of 12 months. And you've not seen that in the Modivo Group, but this is something that will be clearly visible starting from 2023, so Q1 of 2023.

Similarly, in CCC, we can say that their working capital investments in Modivo are going to be very important. And so in CCC, we've been able to improve that by some PLN 480 million in turn on the book value in terms of the price hike on the stock. They've grown here in the Modivo Group by some PLN 300 million. We're going to work on this in order to be able to improve the efficiency of how we utilize working capital, and we want to follow the same targets we have in CCC. And so in 2023, there are a lot of arguments that Modivo could have a much better year than it did in the past. And despite the challenges in the marketplace, these efforts have already been begun, and they were begun in 2022, and we won't have to wait for the results for too long.

Let's go ahead and do basically a summary of the overall conference today. So we see that external factors, the war, inflation, soft consumer position continue to have a major impact on shape of the industry. So we believe that this position will soften through the end of the first half of the year, but then will reverse. In this turbulent period, we can show that we're able to achieve our strategic targets and we're focusing on the major efforts in 2022 in Q4. We can include, amongst our achievements, the increase of revenue by some 19%, with a very high base of last year. So it's somewhat at 45%. And so we can say that our omnichannel sales per square meter, up by 26%, where we've been able to reduce costs by 3% year-on-year in the CCC segment. You can see the results of our omnichannel uniform unique sales.

And so we have PLN 8 million GMV in the marketplace of MODIVO. And so this is something that's growing very quickly. We're aware that Modivo results in 2022 were not satisfactory. But this example, along with the ongoing migration to the new platform, this is something that's underway. This is a fuel that we will utilize to drive very good results in 2023. And this is something that we're committing to.

And so we have the EBITDA HalfPrice, which is high double digit at 12.6%, and it's grown by quite a bit. And as we scale up the business and so the operational leverage will make things even better. We've reduced the stocks on a book value basis by some PLN 480 million in CCC, so we've improved the turnover ratios for stock for some 80 days -- in days on average in the last quarter was even better. And so this is in line with the plan. In part, this was above our expectations. And so now we'll be able to improve the working capital efficiency in Modivo, this is the expectation. And so this is the sum -- the summary in a pill -- in a nutshell of Q4.

Thank you for your attention. And I would invite you to join us for the Q&A session. We'll be back in just a moment.

[Wojciech Latocha, executive]

Good afternoon, ladies and gentlemen. We're going to go ahead and kick off the Q&A session. So let's go on to the first question. When will the IPO of Modivo take place? Will you fulfill the promise of doing it by the end of 2023?

[Marcin Czyczerski, executive]

So ladies and gentlemen, in terms of the prospective IPO of Modivo, as was mentioned during the question itself, we had communicated from the get-go that we're considering this by the end of 2023. We are still in the course of 2023. And so we would uphold this assumption. Of course, we don't want to do this without taking into consideration the overall market context, and we don't want to do a fire sale. That's why we are monitoring this. We'll continue to monitor the marketplace to make sure that the time for the IPO is optimum.

Of course, all of 2022 across Europe was closed for IPOs. And the sentiment is perpetuating and that's why the IPO is pushed back or suspended. And I think that decision is natural and understandable. And so we'll continue to monitor the situation in order to select the optimum time. But the concept itself is in play and is still current.

[Wojciech Latocha, executive]

They have a lot of questions about the IPO of Modivo. There were a large number of questions about the SPO at CCC S.A. When do you -- when will this take place? And the financial agreements, do you have a deadline for securing new funds?

[Marcin Czyczerski, executive]

And so before I respond directly to the SPO, I think we should basically frame that with all of the optimization efforts, we're taking to improve the financial side of the group, we're basically working on our cash flow -- operating cash flow. And that's something we've talked about many times today. We've talked about that, and we showed you very specific outcomes of the work we've done. So above all, we're strengthening our EBITDA in terms of our costs. We're accelerating our stock turnover ratio in days and becoming more efficient. And so we can say that this optimization of working capital is a very important driver contributing to the deleveraging of the company.

If you think about the deadline for the SPO, well, we have 6 months, which ends on the 17th of May 2023. So this is still quite a bit of time for us to be able to finalize the entire process. And I think we can declare at this time that the execution is planned. And we uphold those plans. Of course, there are some consultations with the main shareholder and the Supervisory Board. We have other financial options. We have 7 banks in the consortium of the syndicate we're talking with. We have a lease sale back of -- sale leaseback of assets, dedicated financing for HalfPrice factoring which is an optimum solution in terms of financing our purchases. We're thinking about all that, but the SPO is one of the elements in the overall puzzle, certainly a key element.

[Wojciech Latocha, executive]

You mentioned about cost containment. How are you doing on your savings program of the PLN 300 million in savings, how much of that have you been able to achieve?

[Lukasz Stelmach, executive]

Perhaps I'll react to this question -- respond to this question. Some time ago, we put this plan in place in November. And we been consistent in terms of pursuing this plan. So after some 6 months, we can say that since August, the period of August to December, the CCC business unit, we have savings of roughly PLN 100 million and to show specific things, marketing is down by PLN 15 million. Logistics is down by PLN 10 million. IT is down by more than PLN 10 million. International costs are down by PLN 25 million. So we can say that these savings are in place, have been achieved, very specific.

In terms of Modivo, we can say a lot of things have happened over the most recent 6 months. So the latter half of the financial year, we anticipate that it's around PLN 40 million versus the budget. Brand marketing is the largest line item so PLN 20 million and then packaging down PLN 2 million and so IT by PLN 4 million. So we can say this is -- these are very big items within our overall cost savings program.

[Wojciech Latocha, executive]

We talked about ESG, and we're pleased to hear [indiscernible] talked about that you're asking questions about that. What sort of requirements do you have in terms of suppliers? This is a question posed in English.

[Marcin Czyczerski, executive]

Well, we expect of our suppliers that they will adhere to the requirements set forth in the updated code of contact for suppliers and so this is with respect to human rights. Let me remind you that we're present in Asian countries. We have a pretty big team, procurement team, buying team that are auditing these criteria. And the fulfillment of these criteria, we have some external audits as well that we're starting. So our code of contact for suppliers is based on international guidelines and the OECD guidelines or the UN guidelines in terms of declarations and we're an active participant and we've advised you of this previously.

And so we're carrying for the natural environment. This is one of the key responsibilities of the CCC Group, and we anticipate that our suppliers will join us. And show due diligence in this area. So we're talking about our key suppliers of goods and services. And so you can take a look at our report to get more in-depth information. And so it's a very profound report..

[Wojciech Latocha, executive]

What were the reasons for recalling or dismissing your previous CFO from his position?

[Marcin Czyczerski, executive]

Well, I can indicate here the perception of what is next in terms of the actions to be taken by the CFO, the Management Board, the Supervisory Board. Well, we can say that those visions were not entirely aligned. We also completed the process of refinancing and this was one with BGK Financing. And so a lot of credit goes to the former CFO. And we've made a lot of savings in terms of the working capital. We talked about the PLN 480 million figure. And so the company and the brand are in a better position than they were a year ago. And we recognized that this is a good point in time to make a change and its turn time to turn this area over at Lukasz, who's been the CFO in the Modivo Group, and that's more or less it. So we've basically parted ways in friendly terms.

[Wojciech Latocha, executive]

And outside of Poland, especially in Western Europe, what were the results of Modivo Group? Are consumers from that part of the world, are they less price sensitive?

[Marcin Czyczerski, executive]

We can see that the growth rate is softening. We can see that the price sensitivity in Switzerland and Germany is maybe not as high as in Poland, but it's balanced or offset in other markets. Central and Eastern Europe markets have a relatively good potential with respect to the Western European parts. So we can say that since we are more situated in Central and Eastern in terms of the financial results, this is actually a positive thing that we're more present here.

[Wojciech Latocha, executive]

Having in mind the results published yesterday of the group and having the first hard quarter of 2023, how do you see the condition of the overall group in the full year 2023? Do you anticipate higher revenue versus the previous year?

[Marcin Czyczerski, executive]

Clear -- maybe I'll start with -- in terms of this heavy -- I'm not sure if this was a direct quotation. Basically, I tried to emphasize, I wanted to point out that we have our own agenda. We're improving our efficiency. And this is a real and true agenda. You can see what we've done in CCC, what we've done in HalfPrice. We want to avoid making the impression that we see some positive things and we're walking in that direction with a spring in our step and we haven't noticed any of the difficulties.

We see the difficulties in the industry and the economy and among consumers, and we can see that impact across the board. But having in mind where we have our brands in the midst of all of these challenges transpiring in the first quarter and first half of the year. So CCC and above all, HalfPrice, to some extent, are benefiting from the softness of the consumer. By offering the best value for money, HalfPrice is truly a distinguishing market.

So to respond to the question, in 2023, we want to grow our revenue base. As it's frequently said, in our industry. We want to do that on a double-digit pace, but this is not something that we're focusing on. You can perhaps see in our presentation for some time now in our presentation, profitability is the most important thing and what's happening with working capital. And at the end of the day, cash flow and what's happening with cash, this is basically what is our mark of success or the lack of success, and that's why we have a very important and significant improvement in the financial position of the company in 2023 having a result of -- having in mind the results that will contribute to the year that has begun now, and we have the capital side operations that Lukasz mentioned about where we have a whole portfolio of things to be done. So this is where we're going to be focusing.

[Wojciech Latocha, executive]

We have the fourth year in a row where you have a net loss. What is the idea of the management Board to generate value outside of rights offerings. This is something that's happened a couple of times. You've not been successful in driving this net result.

[Marcin Czyczerski, executive]

That's a very good question. And we frequently discussed that. What has happened over the last 3 years, I think we've responded to the questions contained -- this question posed during the presentation. Well, since this question has nested in a number of elements, with respect to CCC, over the last 3 years, we've been able to transform our model from one that was based on not entirely on fashionable products. We had less and less demand, and we've been able to rebuild our square meters in conventional stores, brick-and-mortar sources.

So e-commerce started in June of 2019. And at the end of 2022, basically, everybody sees us as the leader of digitization of stores and the omnichannel leader. And so a lot has been done. And so if you look at what has happened in terms of our growth rate of e-commerce, there is a major difference between ourselves.

So HalfPrice. We didn't even have it 2 years ago. Now we have it. We were discussing whether or not this was a good -- people were wondering whether we'd even learned how to sell shoes and footwear. And you can see the parameters that we have here at HalfPrice.

And if we look at the last part of our business, so eobuwie and Modivo. So I would just ask for a little bit of patience. And so if you can compare our results to others and you can look at the horizons, and this was a demanding period for this portion of the market. Disregarding that, this is not something we're satisfied with in terms of the results, and we're declaring that in 2023, we're going to have much better results, both in terms of the results itself as well as working capital efficiency.

And this is something that we're talking about quite a bit in terms of operating cash flow and improving the internal excellence and converting that into costs and our working capital. This is a portion of the business where a lot has been done. And we can see this effect in HalfPrice and CCC and 2023, this is something that we'll see in Modivo and eobuwie as well.

[Wojciech Latocha, executive]

We have the next question. With the SoftBank bonds, when will they mature? Will they be paid back in cash or would they be converted into equity?

[Marcin Czyczerski, executive]

Basically in mid-2024, and if there's no IPO, they can either be redeemed or the contract could be modified. And so they form -- they're secured. And so we're now in 2023 until the middle of 2024, we still have 1.5 years, and we'll be modifying the financing formula with our partner to meet the needs of Modivo and having in mind the market environment and the ability to do and mount an IPO. And so we can say that the base scenarios to do the IPO this year.

[Wojciech Latocha, executive]

Why do you have major cost hikes in Modivo in terms of overhead, SG&A where we had an increase of 3.4%.

[Marcin Czyczerski, executive]

Well, above all, there are 3 things. The size of operations was built not for a 7% growth, but from a more substantial growth. I talked about that previously. The second thing, the major thing in the middle is technology in terms of contractor costs and employment costs. So we've made some change in terms of the architecture in its previous version that it wasn't scalable [indiscernible] . And so basically, we're moving into a new application for the marketplace, new technology. And above all, we're -- we had growing FTEs in that area technology. We're going to change maybe our best practices in terms of how we present costs of stores in eobuwie and the costs of e-commerce and CCC because we're showing variable costs that fully are aligned to the sales points.

And so in terms of the head of cost, with growing scale, this doesn't give you the full picture. And if you look at other entities, we're going to change that approach in the near future. And so these sales channels, so it's e-commerce or retail channels, we're going to show that per sales points. And we're going to correct the head office costs.

[Wojciech Latocha, executive]

So in 2023, what's going to happen with the growth of HalfPrice?

[Marcin Czyczerski, executive]

Well, our ambition is to grow by improving operating results. We have a lot of ambitions in terms of like-for-like sales in 2023, we're talking about 24%, 25%. So that's the first area of growth in terms of extending the space we have. Depending on the market environment, we want to open some 20 to 30 stores in Poland as well as in markets where we're present. Plus in the new market, we want to penetrate, which is Latvia, this should increase the sales area by 20%, 30%.

[Wojciech Latocha, executive]

The next question since things are going so well, why is it so bad? Why is the market stopping to believe that you're going to be able to repay the bonds and debt? Are you going to be able to calm down the situation? Are you going to do any type of efforts on the catalyst to do redemptions of bonds?

[Marcin Czyczerski, executive]

Well, we continue to reiterate in terms of prices of equities and prices of bonds, we're not the main actor. We're the subject of those discussions. We don't drive those prices. Well, in terms of the perception, why the market is refusing to believe in something. Well, all I can really say, I can only hypothesize, but if I were to respond to that from the depth of my heart, I would say, honestly but the overall market is very strongly anchored in the value of the group within Modivo itself and for a long period of time hasn't seen that much of what's happening -- what the positive things that are happening in CCC in terms of the transformation, the product transformation, omnichannel transformation, what's happening in terms of communication there and how CCC has managed today the market, I think, doesn't really perceive or hasn't really come to under and how much value is being generated by HalfPrice.

You're multiplying the rates of growth and the EBITDAs of HalfPrice. And you're comparing that to American players. Well, this is the reality. I don't think the market hasn't noted, hasn't appreciated the improvement that has been made. So deleveraging of the company is in our stock, which is located at Strefowa 6 Street. And so we've got PLN 480 million less in our stock. And so the money is in the cash flow of the company. And so basically, the market hasn't appreciated the total value of all of these brands.

They're looking at Modivo with a one-off period, which was difficult for all of the players in the market, and they're comparing it to other players. And so to understand things better to gain a better grasp and we have -- we're convinced that in 2023 is going to be a good year for eobuwie and for Modivo. This is my perspective. And this is what I think, and I can only surmise what other reasons might stand behind this. It's not up for me to say, I said we are the subject matter and not the actor here.

[Wojciech Latocha, executive]

What was your like-for-like sales factor in Q4 for retail stores, CCC.

[Marcin Czyczerski, executive]

In Q4, it was 33% in the positive.

[Wojciech Latocha, executive]

What is the company waiting for in terms of the rates offering of PLN 500 million? You explained that without subscription rights aim to give money to the company, you have 6 months that have transpired and the rights offering hasn't taken place where the bonds are being sold for 73% of their face value. And so we're talking about covenants breaking. What is happening?

[Marcin Czyczerski, executive]

Well, the issuance is will be done in response to the request of the main shareholder. So other shareholders might not participate and this was treated as the main approach having in mind formalities in time. And so the money from this -- the proceeds from this issue or plan to be assigned to reduce debt -- write down debt. Well, the issue is planned for 17 May 2023. And so the plans are being upheld. And the efforts that the company is making, and we can -- we've shown you the results of what we've done until now. And perhaps this issue is not as urgent as it once seemed, but it would be very difficult for us to comment at what prices our bonds are sold.

We as a company, we can declare or we can show basically that all of our financial liabilities are being met on a timely basis. And this is true of financial abilities to financial institutions. So we don't see any threats. Let me say a little more. We're not even within -- or in the middle, but not even in the very middle of the period that was allotted to us by the shareholder meeting for running this. So I'm not talking about -- we're not even at the midpoint of this period. And so these type of things happen close to the end of the period as opposed to the beginning. So if we talk about covenants in reference to the most recent press release on Modivo, we gave some more information about that today. This was based on what Lukasz showed that the financial debt in a traditional sense of Modivo versus EBITDA.

I'm just speaking from memory, you can correct me. Basically, it's 1x, 1.5x. We're only talking about the technical aspect of qualifying or classifying convertible bonds, which we treat as quasi-equity like because they're convertible. The intention of the company is to retain its equity whereas in bank agreements, which were entered into prior to the issuance of these convertible bonds. Well, they're classified as that. This is something that we're working on to change that. Let me give you that additional few words of precision.

What sort of first price growth you anticipate in CCC this year? Today, we're not going to give any guidance about 2023. What I can say is that we can see that our competitors, that our brand name suppliers are raising prices substantially for '23. We're going to raise them as much as we raise them. I don't think this is a question that we should respond to it, especially in a public forum.

What's important to us, and there is some potential here and we have potential on both sides. We have long supply chains, and we can say that the parameters are improving in terms of inflation in our supplier countries. This is never really a major problem elsewhere. The cost of transportation are at a normalized level. This is something that offers a lot of potential and the costs of currencies are at a better level than we anticipated. So we're far from the maximum levels.

And this is what we anticipate. We anticipate that we're going to have some substantial margins in 2023 and CCC.

[Wojciech Latocha, executive]

How much CapEx are you planning to allocate in 2023? And how much of that CapEx will be for Modivo?

[Marcin Czyczerski, executive]

We do not give that type of guidance. What we're saying that in terms of operating cash flow or EBITDA or working on working capital or in terms of a rational approach to spending money and creating new investments, we take a very rational approach and we're focused on ensuring that the company is able to grow in terms of cash and EBITDA. And not anything else.

[Wojciech Latocha, executive]

You have the very major decline of stock at the end of January. This suggests that you're in a rescue operation. So in terms of this critical cash position, where you're talking about refinancing Modivo or also CCC outside of the issuance of stock to the controlling shareholder?

[Marcin Czyczerski, executive]

Well, we're not doing any type of rescue operations. In terms of the first portion of the question, I'm not sure what something is suggesting, you're not suggesting, if somebody were to listen moving back over the last 5 conferences, I've been very consistent in mentioning that we're pursuing this program. We're executing it. And we anticipate the reduction. We want to bring down stock turnover ratio in days to some 200 days -- 230 days, so we're close to 230 days. We're coming close to the benchmark set by our competitors. This is the level of inventory we should have.

We've been able to achieve that in CCC. We have some potential to improve in HalfPrice. We have a lot of potential to improve in Modivo, and this is something we intend to do.

[Wojciech Latocha, executive]

How much debt will mature in 2023?

[Marcin Czyczerski, executive]

In terms of maturing debt in 2023, we don't have that debt. Our debt will mature in subsequent reporting periods as we've anticipated. As we've said, all of our liabilities are being paid on schedule. We have a deleveraging plan according to which we're moving forward in an unwavering basis. So Modivo is talking with banks about extending its current financing. And we'll advise you of that in terms of the rights offering, one of its ideas is to reduce financing costs and to strengthen the capital position of the group to improve the balance sheet and improve the ratios overall.

[Wojciech Latocha, executive]

Why were the bonds from banks actually reclassified as short term?

[Marcin Czyczerski, executive]

It was presented in the short term because the intention is to make settlements under the IPO prior to the lapse of 12 months. This is a result of the accounting rules.

[Wojciech Latocha, executive]

Where do you see a special slowdown in terms of sales growth? Is it more in Poland? Or is it more broad?

[Marcin Czyczerski, executive]

We see positive growth rate in Q4, which is the subject matter of our presentation. You've seen in our like-for-like sales in retail, we're up 30% in Q4. In CCC and HalfPrice, we see several smaller markets where there's a bigger slowdown or there's a problem with consumers outside of Poland. So we can say that in Poland we're at historical minimum levels. Over the last 3 months, we can say the trend has reversed and has been improving. In 3 markets, we can say the situation is similar, or be a little more challenging, but those are smaller markets.

As I mentioned, in 2023, this is a year in which we assume that international sales will have a faster growth rate than in Poland, and we'll have a satisfying level of sales growth in Poland. In terms of e-commerce, we can say that it's growing dynamically year-on-year everywhere. To a large extent, thanks to the omnichannel solutions we have. And here, we have 2 markets that the rates are a little softer, but it's still in double-digit figures. So we can say that would be the short look at the map, Western Europe is a slightly bigger problem, but our presence there is much smaller. But we also see that the fallout amongst consumers because the consumer crisis started half a year earlier than in Poland, and we can see some symptoms that suggest that fall is on its way. And so we can assume that in maybe 6 months, this all fall will reach Poland in terms of improving the balance sheet of the company.

[Wojciech Latocha, executive]

And so leaseback that you mentioned, what sort of figure are we talking about? And what would be the object of the sale leaseback?

[Marcin Czyczerski, executive]

It's a little too earlier -- a little too early and premature to mention specific amounts. We have in mind our warehouse assets in Polkowice. According to the information we have, it's estimated of having a value of tens of millions of euros. It's a little bit premature to talk about specific times and amounts. And we'll advise you according to the procedures if the transaction comes closer to being done.

[Wojciech Latocha, executive]

If we look at cost per square meter, what do you anticipate here in CCC in the upcoming year?

[Marcin Czyczerski, executive]

Well, we're not going to give you any greater guidance today, as I mentioned previously, we do see that in brick-and-mortar stores, there are some unfavorable parameters because of indexation, because of inflation, what's happening with Euro and minimum salaries. On the other hand, we're moving forward quite swiftly in terms of operational excellence and our logistics that many of our stores have been able to mitigate. We've been able to take advantage of this effect and so if we look at revenue and costs, we can say that the cost dynamic will not be higher than half of the revenue dynamic growth rate. So it shouldn't be a double-digit figure.

[Wojciech Latocha, executive]

Could you give us some color commentary about stock? If we look at the beginning and end of Q4, we estimate that you have much smaller purchases of new collections year-on-year, can you confirm that? And what's the percentage of the new collections, so spring and summer 2023 in the overall composition of stock in Modivo and CCC?

[Marcin Czyczerski, executive]

Without taking very deep into the details, when you drop stock by such a significant level, we can say that we have very simple rules. First we have to synchronize the delivery dates because you don't want the collection to arrive too early. In the past, we weren't masters of the world or champions of the world, we probably still aren't. But we're good enough, and that's sufficient for us.

The next thing is the breakdown in [indiscernible] . So the colors and in terms of -- to match the dates when the products are being sold to a large extent, this is dependent on the depth of collections in terms of sizes and colors. So, we can say that it's the same as in 2022 spring and summer, more or less, maybe it's a little higher. But we can say that the delivery dates will be more in tune. So we'll receive goods in spring, when we're going to sell spring collection and summer goods will arrive when we're going to sell summer goods.

This is one of the things. This is a major simplification we are dealing with. We have this stock turnover program that consists of hundreds of activities. If we look at the level of stock on 30 January, I don't see a lot of potential for additional improvement, maybe a few tens of millions. But if you look at the average stock level and what's happening in season, there's still a lot for us to show, and this will have an impact on the average quantum of stock. We want to reduce lost sales because we have goods present not in the store where it should be or not in the channel where it should be. So I can declare that you'll see improvement and progress in terms of stock turnover as well as the sales generated. We know what we had to improve. We've improved that, and this will be particularly visible in Q2.

[Wojciech Latocha, executive]

Could you give us some information what percentage of the interest on the bonds has been capitalized as of 31 January of this year? I don't understand why this was netted away for today's presentation because shareholders would be diluted.

[Marcin Czyczerski, executive]

Well, this is a very technical question in terms of accounting aspects, but I'll try to respond to it. As we presented, the total value of the bonds is PLN 624 million and this is decomposed in to 3 components. The first thing is the debt instrument of PLN 500 million. Then we have the second element, which is PLN 49 million almost in interest and the rest of that amount is the valuation of an embedded instrument, which is valued at the end of every reporting period. And it seems to us that we presented this in such a way in the presentation, this was transparent and clear. So we showed the full amount of the debt. We broke it down into the bond debt and other debt.

[Wojciech Latocha, executive]

So sales in eobuwie, despite higher marketing spend and promotions is lower than last year. Could you give us some additional color commentary about the market performance and what's happening in terms of the average value of the basket and so on and so forth?

[Marcin Czyczerski, executive]

If we look at price promotions, this is a result of the strong price competition and the fact that we had more stock in terms of autumn/winter 2022, in terms of higher marketing spend, whether this is a result of several factors, we had inflation in per click or per session. We can say that deteriorating sentiment amongst consumers on many markets, that meant that the value of the basket in Western Europe was falling. We also have the product mix, which is a major driver. So consumer is trading down or looking at a higher premium.

But what's very important here. And I want to address this, we haven't talked about that. If we look at our head office costs, or what has happened in Modivo and eobuwie, this is not performing. We can say that we're changing the platform. We're finishing up that program, and we can see how well and how strong the new platform, that app is improving. The traffic that we're not paying for. And this is something that will contribute to better parameters in terms of our performance versus revenue in subsequent quarters.

[Wojciech Latocha, executive]

The next question was posed in English. I'll translate it. Do you plan to have greater synergies between CCC and Modivo? You could have cannibalization as a result, especially if we look at online sales, do you see potential for greater synergy in terms of marketing spend?

[Marcin Czyczerski, executive]

We're paying a lot of attention to 2 things. We want these 2 things to be independent of one another. And we want to be able to tap into what they offer the best for the second brand. And so we can say that the operator of e-commerce strategy in CCC is Modivo through the warehouse K1 or in the future K2 warehouse. And in terms of our e-commerce sales, we have our own products of CCC in eobuwie and the Modivo platform. And we have a single balance sheet, and we're not duplicating the warehouse input, so we have the cost.

We're looking for additional ways to tap into that. We're thinking about how to create a footwear hub as we merge these 2 concepts and how we can propose several hundred brands in Modivo and combine the traffic from own brands of CCC. So this is something that raises the bar and increases sales densities to sales per square meter. So we have new places to sell and pick up products. And so I think there's -- we see quite a few new areas of synergy, and this is something that we'll continue to pursue.

And what I've said, our own brands in CCC are more and more popular. And we have a very specific program on how to popularize even more strongly the eobuwie platform. Maybe this was not a sufficiently high priority in 2022, I should say, put it this way. And so in 2023, we want to change these things because we did better in 2021. And we want to have the highest margin products. And we can say that CCC products really stand out in terms of margins and high rotation turnover.

[Wojciech Latocha, executive]

One more question about stock. This is the light mode of what's happened in today's conference. What happened that you suddenly were able to reduce stock. In CCC, what could you do it in 1 year, but weren't able to do it over the previous 3 years? What's the impact maybe?

[Marcin Czyczerski, executive]

Well, I have comfort, a lot of comfort in terms of being consistent. In the scope, since 2017, in terms of meetings with investors and analysts -- I've been addressing this issue. That it's not something you can do with stock. It's something that can be improved. But what had to change from that point in time to 2 years ago, I've addressed that. We had to make very strong changes to our IT systems in order to be able to track our stock, track and monitor the full supply changes. These technology issues weren't fully invested. We had to be able to respond to customers who are [indiscernible] moving through social media and didn't really have an idea about what are fashionable products, whether you're talking about Warsaw or Prague. And the company was based on a product like this for quite a long term -- we didn't have a channel that was giving you the maximum impact in combination with the brick-and-mortar network.

We also had a shortage of human skills and competencies. In order to find the quality parameters to plan procurement, this is very important across the board in order to define what you really need and how it should be done. I've talked about that from the very beginning of 2017. The critical mass is something that we have to build in order to be able to do this. And starting with the Supervisory Board, all the way down to people who are actually implementing these policies in this program, we were able to build a strong commitment, this was the right time. This was something that we could do more or less 2 years ago.

And we set up the targets and we've achieved those targets. And we know we can do more, we want to do more. And that's the full response to your question that is something that should have happened, but the organization had to get to that point in time that it can do it. We construe this in such a way, and that's suggesting that we're flawless -- far from it. We can see today that our stores are well prepared for spring much better than any other stores. At the same time, we continue to sell winter products pretty well. So these 2 things aren't opposing.

Can we improve? 200%, yes. But it doesn't mean we should have done that. But the PLN 480 million we saved, once again, this is what we said. This is the bank, this is where we have on the street, [indiscernible]. This is where we have the safety of the company stored. And this is what exactly what happened.

[Wojciech Latocha, executive]

We have 2 last questions now. In HalfPrice, we can see the decline of the gross margin quarter-on-quarter. To what extent is this a seasonal impact? And to what extent is this an impact or a result of focusing on top line sales? And what are your forecasts for HalfPrice?

[Marcin Czyczerski, executive]

If we look at gross margin HalfPrice, we should compare it year-on-year, and it's grown by 3.7 percentage points year-on-year. If you look at the quarter-to-quarter comparison for gross margin, this makes limited sense because of all this is driven by sales promotions. You have to have in mind, although we have ambitions for the gross margin to be as high as possible, if it's too high in terms of its target, this would actually slow down the inventory turnover ratio or stock turn ratio in stores. And from the point of view of bottom line, this would not be an efficient undertaking. So we try to calibrate assumptions in 2023 in terms of margins and to make sure that the bottom line, the stock inventory return operation to make sure that all of those things are optimum.

But in terms of the question, in terms of the rollout for HalfPrice in the upcoming quarters, we can say that we would like for these stores to be opened in the first half of the year to ensure that they can contribute to the sales result in a given financial year of 2023.

[Wojciech Latocha, executive]

What is the biggest threat to the operations of the company in H1 2023? What do you have in mind when you say the Q1 could be more demanding?

[Marcin Czyczerski, executive]

So I think I responded to that question several times during the course of today's Q&A. First, I wouldn't say that it's a threat. We see a challenge, which others are also grappling with. And I think we've addressed many of these challenges much better than others. And so if we look at Q1 and the beginning of 2023, as you analyze, observe or track other companies, so it's the condition of the consumer who will see how much they have to pay for natural gas, electricity. So the perception of purchasing power may be subject to major degradation. It should not be downgraded from what we saw prior to January or in January and prior to the holidays.

I would just sensitize you to this as I did prior to the conference for Q3 that consumer and the consumers' purchasing power tells us where we have advantages and we have to adapt to that. That's what happens with sales.

The other thing that I would mention is inflation and its impact on costs. We're in the process of pursuing the savings program we referred to and we're able to offset a large amount of this cost increase through higher productivity. This is a demanding quarter for the entire industry and perhaps the first half will be demanding period and then will be lean down because of cost, lean down because of stock costs or -- and we have Modivo. So despite these challenges, we believe that this half of the year will enable us to generate better results than the marketplace.

So, I think with this optimistic final word, we can wrap up today's conference. Thank you for your response. Ladies and gentlemen, for all the questions you posed. This was the final question. I would encourage you on an unwavering basis to maintain contact with the IR team at the conference, and we'll invite you to the next conference, which will take place in 3 months. And in the meantime, we'll have the opportunity to meet at conferences set up and run by brokers. Thank you very much -- thank you very much. Have a nice day. Goodbye then. Bye-bye.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]