LEG Immobilien SE

XETRA:LEG

Earnings Call Transcript 2021-Q2

[Operator]

Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining the LEG conference call. [Operator Instructions]I would now like to turn the conference over to Mr. Frank Kopfinger, Head of Investor Relations. Please go ahead.

[Frank Kopfinger, Head of Investor Relations]

Thanks, Timo, and good morning, everyone, from Düsseldorf. Welcome to our Q2 2021 results call, and thank you for your participation. You have in the call our entire management team with our CEO, Lars von Lackum; our CFO, Susanne Schroter; as well as our COO, Volker Wiegel. You'll find the presentation document as well as the quarterly report within the IR section of our homepage. Please note that there is also a disclaimer, which you'll find on Page 3 of our presentation. And with this, I hand it over to you, Lars.

[Lars von Lackum, CEO & Chairman of the Management Board]

Thank you, Frank. Good morning, everyone, from my side, and thank you for joining our H1 call today. The first 6 months of this year have been a very strong period for us as a company. We reached a new record FFO I in H1, margins are at very attractive levels, we grew our portfolio along our ambition and we operate in a very attractive market, reflected in a valuation uplift of 7.5% just in H1.Our very strong operational performance gives us sufficient confidence to become more optimistic about our guidance outlook. We expect our FFO I for the financial year to point towards the upper end of our EUR 410 million to EUR 420 million target range. You can find the highlights of H1 on Page 6 of our presentation. Susanne and Volker will later comment on our operational and financial success story in more detail. Therefore, I will restrict myself to pointing out only the major KPIs.Our like-for-like range grew by 3.5%, while our vacancy declined by 80 bps to now just 2.5% leading to a strong EBITDA margin of 77.2%. We add around 4,000 units to our platform in 2021, which puts us on track for our growth ambition in a very competitive market. On ESG, we made further progress. As you might have seen, we published our comprehensive ESG strategy in June, which provided more insight into our path towards climate neutrality until 2045. The presentation also includes our ambition to become a more customer-centric organization. While being very proud of our strong H1 performance and excellent set of numbers, the dramatic flooding events by mid-July and the devastating damages caused in parts of North Rhine-Westphalia and Rhineland-Palatinate overshadow this. Due to a broad insurance cover, including damages from flood events, the financial impact on LEG as a company remains small. However, we are feeling strongly with those which have lost members of their families or their home, among them also some of our tenants as well as our employees. Let me now give you a brief overview on how our portfolio has been affected by this natural hazard. I now turn to Slide 7. From July 13 to July 18, i.e., just over a 5-day period, major areas in North Rhine-Westphalia and Rhineland-Palatinate experienced extreme flooding from torrential rain. The German Insurance Association estimates that this event might turn out to be one of the most severe weather events in Germany since 2002. Fortunately, flooded cellars represent the vast majority of our damages. Overall, 200 units of our portfolio has been affected, of which currently 35 units are inhabitable due to direct flood impact. Almost all of them are situated in the city of Ahrweiler that has been hit hardest. For those tenants, we offered alternative apartments or hotel rooms as an intermediate solution. Costs for replacements, general clearance of our buildings as well as refurbishment costs are in general covered by our insurance. Therefore, the financial effect for LEG remains variable. For main tenants, flooded cellars, garage or units meant that they lost parts or even all of their belongings. Therefore, we provided an immediately -- immediate EUR 250,000 flood relief program via our 2 LEG foundation. Additionally, we provided EUR 1 million to clear out damaged basements and apartments. This provides support also to those tenants who do not have the insurance coverage required. Finally, we also offer help to our employees that suffered from the damages caused by the floods. We offer up to EUR 2,000 per employee as a onetime payment and grant them up to 2 weeks for clearance works in their own homes. We started already with refurbishment and repair activities. Therefore, we hope to bring each and everyone back to its home the latest by Christmas 2021. However, that is not completely in our hands as it depends on the rebuilding of critical infrastructure like electricity lines or gas pipes. Please follow me now to Slide 8 to give you some more background on our portfolio growth so far. As of today, we added around 4,000 units to our portfolio. Two bigger portfolios represent around 2/3 of those new units. We bought one of the portfolios from Deutsche Wohnen. The portfolio encompasses 2,200 units, which are based in Rhineland-Palatinate and the Rhine-Neckar region in direct proximity to the units we had acquired a year ago. The overall purchase price for the 4,000 units amounts to less than EUR 600 million translating into a net cold in-place rent multiple of 27% and an annual FFO I contribution of around EUR 13 million. We see significant rent potential as the majority of those units are within attractive locations, e.g. Monheim, Düsseldorf and Cologne. Therefore, more than 80% of the newly acquired units are based in high-growth markets and only 20% come from stable and higher-yielding markets. All transactions are in line with our acquisition strategy, especially our acquisition KPIs. They allow us to almost double our presence in the Rhine-Neckar region and significantly add to our Hannover hub. Please take note that transfer ownership for the majority of the 4,000 units will take place in Q3 and Q4 this year. In a more than demanding market, this represents a major step towards our 7,000 units target. With this, I come to the end of my presentation. I hand it over to Volker, who will give you an overview of our portfolio and the operational successes achieved in H1.

[Volker Wiegel, COO & Member of Management Board]

Thank you, Lars, and good morning, everybody, from my side. Let me start with a comprehensive overview of our portfolio on Slide 10. As of the reporting date, at the end of June, we had a portfolio of around 145,000 units. As Lars already mentioned, we are well on track with our acquisitions. They help us to diversify our regional footprint even further. Based on the acquisitions, our share of units outside North Rhine-Westphalia will grow to over 10% by the end of the year. Compared to 2018, we have grown that part of our portfolio by factor 10, and it is a strong contributor to our growth story by now. Let me now go to the next slide with some further details on our portfolio. As you can see from Slide 11, we are now heading towards the 150,000 units mark. You know that there is a certain time lag between the signing and closing of an acquisition. The figures on this slide refer exclusively to the date of transfer of ownership, i.e. the moment from when those acquisitions are reflected in our numbers. The 617 units that were transferred in the first half had been signed partly already at the end of last year. The numbers for the coming 2 quarters reflect signed deals and the estimated time and transfer of ownership of those. We expect to integrate the 2,200 units that we bought from Deutsche Wohnen at the very end of Q4, i.e., on December 31, 2021, with no impact on our numbers in this year. To allow you to reconcile our geographical expansion over the course of the last 3 years, we will provide some more details on the locations of our acquisitions in the box on the right hand of the slide. Let us now move to Slide #12 and to the rent development. Like-for-like rents in our portfolio grew by 3.5%. Please keep in mind that the base line in the previous year was comparatively low. From March 2020, we suspended rent increases on a voluntary basis to support our customers during the first lockdown caused by the corona pandemic. Therefore, the 3.5% increase is not much of a proxy for the full year. However, you can rest assured that we stick to our target for a like-for-like rent increase of 3% for 2021 as a whole. From the slide, you can see that we had some catch-up effects in the meantime. Rent increases according to rent tables were the strongest driver in the first half contributing with 200 basis points. The largest locations in our portfolio, Dortmund, also got a new rent table in new Mietspiegel at the beginning of the year. On average, the Mietspiegel rents in Dortmund rose by 4.4%. The free financing units, which account for 76% of the portfolio, were up 4.2% on a like-for-like basis. It was 4.4% for both high growth and stable markets and still 3.8% for the higher-yielding markets. The average in-place rent for free-financed units was EUR 6.50 per square meters in months at the end of June 2021. This underlines our focus on an affordable product. Even more so, taking into consideration our subsidized units that represent 24% of the portfolio and monthly rent stands at EUR 4.91 per square meter on average. Coming back to the free-financed units, I will point to a few highlights for the free-financed units on a like-for-like basis. In the dynamic Rhine area, our in-place rent in Monheim, near Cologne rose by 11.2% to EUR 8.30 per square meter. In Gütersloh, located in Westphalia and Oldenburg, near Bremen, rents rose by 5.6% or 5.4%, respectively. In the stable markets, we are particularly pleased with the development in our 2 largest locations, Dortmund and Mönchengladbach, where rents were up 5%. In Dortmund, as I mentioned earlier, the rent increase was partly driven by the rent table, but also due to modernization and reletting. Finally, in the higher-yielding market, spent almost with 6.8% rent increase. Let us now move on to Slide 13. On this page, we show in detail the EPRA vacancy by market. The strong vacancy decline continues. This holds true for all 3 market segments and almost all of our locations. We realized the highest momentum again in the higher-yielding markets, major driver was the successful reduction of vacancy in 2 of our largest locations. In Gelsenkirchen, vacancy came down by 180 basis points and induced book by 130 basis points. However, there was also an improvement in many other of our locations in the purple markets, still reflecting the new target operating model, which we implemented in 2019. The strong demand for affordable housing and our exposure to attractive regions certainly helped keeping vacancies low. However, customer satisfaction is also key to operating excellence. This brings me to the value-added services on Slide 14. The FFO I contribution of our value-added services increased strongly in the first half, reaching EUR 19 million. This increase is partly attributable to the new business of LWS Plus. We acquired LWS Plus last year as we expect for the refurbishment of vacant apartments. First time consolidation of the company took place in Q4 of 2020. Certainly, the services also benefit from the rollout to the increasing number of units in our portfolio. We already see more than 30% of the turn cost spend out of LWS Plus. Additionally, H1 2021 includes some smaller positive items, including accounting items that will be eliminated in the course of the year. Especially in our energy business. There is a cyclicality with a substantially stronger H1 result than H2. Therefore, you should not double the H1 result as a proxy for the full year. Coming to Slide #15 and our investments. Overall, our investments increased by more than 24% to EUR 198.2 million, and in line with our planning. Adjusted for items such as new construction, acquisition backlog and safety measures and capitalized own work, total investments were EUR 180.5 million or EUR 19.14 per square meters. The increase in maintenance was mainly due to the portfolio growth, but also due to price increases. As usual, the bulk of investments relates to CapEx, which accounts for EUR 14.37 per square meter. This includes turn costs for renovating bathrooms, floors or technical installations before reletting an apartment. These measures allow for rent increases and improve the satisfaction of the future customer substantially. A thorough renovation saves us many small scales repairs in the future. The upper half of the column stands for modernization. This includes refurbishment projects for the sitting tenant like bathrooms or balconies and, above all, our spending for energetic modernization. We now have a very strict definition, meaning that the position, energetic modernization, only includes those items that directly target CO2 savings, e.g. including the material for the thermal installation, but not a scaffolding needed to install it. In the first half, we completed energetic measures for more than 1,600 units, and we are well on track to reach our 2021 target to energetically refurbish 3% of our units. Most of the measures are still in progress. And with those that will be completed by the end of December, we will certainly reach our environmental targets for this year. And with this, I hand it over to Susanne for the financials.

[Susanne Schroter-Crossan]

Thank you, Volker. Good morning, everyone, also from my side. Let me provide you with more details on our financials. Please have a look at Slide 17, which shows the development of our key P&L items. We have again been able to improve our margins across all P&L lines. Our net cold rent increased by 9.9% to close to EUR 339 million. This is driven by rent increases as well as by the new units that we added to the portfolio last year and during the first half of this year. The adjusted net rental and lease income outpaced the top line growth and rose by 11.6% to EUR 275 million. As a result, the margin increased to 81.3%, driven by scale effects due to a bigger portfolio and due to the strong performance of our services business. Our EBITDA grew by 11.1% to EUR 261 million, and we could improve the EBITDA margin by 80 basis points to 77.2%. For the full year, we continue to expect an EBITDA margin of around 75%. Like last year, we will we see some rebalancing of margins in the second half because several cost positions are not distributed linearly across the year. Our FFO I grew strongly by around 12% to EUR 218.1 million, which puts us well on track for achieving the upper end of our financial year guidance. For detailed drivers of our FFO I expansion, please turn to the next slide. The biggest driver of our FFO I increase compared to H1 2020 is the contribution from last year's acquisitions with EUR 14.7 million. The second biggest driver were rent increases, which contributed EUR 11.1 million. We also benefited from lower like-for-like operating costs while the issuance of 2 corporate bonds to fund the growth of the platform led to an increase of the net cash interest amount paid. As I just said, some of those positive cost effects will rebalance in the second half of the year, similar to what you saw last year. On Page 19, we have summarized our valuation update for the first half of 2021. We have revalued our entire portfolio, and we have seen strong momentum across all markets. The revaluation gains amounted to EUR 1.1 billion, which is an uplift of 7.5% over year-end level 2020. Including CapEx, the value increased by 8.5%. We feel very comfortable with our valuation levels, which as usual have been confirmed by CBRE as our external appraiser. The main value driver was yield compression. The discount rate came down from 4.5% to 4.2%, when performance contributed EUR 283 million. In terms of capital composition, around 12% of the valuation uplift comes from our CapEx spending, which amounted to EUR 147 million. Looking at our different market clusters, we saw the strongest value momentum in the high-growth markets with an average revaluation gain of 8.7%. This was partially driven by specific effects like the completion of some larger modernization projects in our high-growth markets. However, we also saw strong increases in our stable and higher-yielding markets. While H1 was exceptionally strong, we do see further upside for H2 as the scarcity of the affordable housing product and the unchanged high demand for this type of asset prevails. On Slide 20, we have, as usual, put together the key valuation metrics broken down by our 3 market segments. As you have seen on Slide 8 regarding our acquisitions, we have recently acquired mostly in the orange markers, which is a reflection of our expansion outside NRW as well as opportunity. We would like to reiterate, though, that we continue to feel very comfortable with all our 3 market segments and the respective asset profile. The gross value per square meter amounts to EUR 1,641 at the end of June. Our assets still offer an average an attractive gross yield of 4.4% in comparison to a negative interest rate environment along the entire curve in Germany. I'm now coming to Slide 21 with an update on our financial profile. A defensive financing strategy and a strong balance sheet have always been the basis for our business and are a key requirement for further growth. With the 2 corporate bond issues and the early redemption of a EUR 200 million mortgage loan in H1, we have reduced our interest cost to an average 1.24% from 1.35% a year ago. We've also increased unencumbered assets by circa EUR 900 million, creating additional financial flexibility. Given the strong liquidity position of EUR 886 million at the end of H1 '21, our LTV stands at 36.4%, with net debt-to-EBITDA at 11.8x. However, you should be aware that approximately EUR 650 million are earmarked for acquisitions already signed, which transfer ownership during the second half of the year and for our new development projects. Assuming no additional acquisition, the pro forma LTV post payment of those acquisitions amounts to around 39% and the pro forma net debt-to-EBITDA to around 13x. And now back to Lars for our outlook.

[Lars von Lackum, CEO & Chairman of the Management Board]

Thank you, Susanne. We are well on track in every regard, and we can, therefore, confirm all of our financial targets for 2021. Furthermore, when looking at our guidance chart on Page 23, you can see that we have specified our FFO I guidance. We are still sticking to the range of EUR 410 million to EUR 420 million, but we are now pointing to the upper end of this range. On a year-on-year basis, this suggests an increase of around 10%, taking the upper end of our FFO I range into account. I can also confirm like-for-like rental growth of around 3% and a further increase of the EBITDA margin to roughly 75%. We also remain focused on our conservative balance sheet structure and stick to our LTV target set at a maximum of 43%. The transaction market certainly remains more than tight. Looking at what we have signed in the first half, we are on track towards our full year acquisition ambition of 7,000 units. As always, you can expect us to work hard towards our ambition, but you can also rest assured that we will stay disciplined in all deals concerning our KPIs. We are also comfortable with our ESG targets. Our short-term ESG targets include the energetic refurbishment. Volker already explained that we are about to reach our 3% target. We are also well underway to reduce the number of iteration calls from tenants by 15% at year-end. Finally, I would like to open up the call for Q&A. My colleagues and I are very happy to take your questions.

[Frank Kopfinger, Head of Investor Relations]

Thanks, Lars. And with this, we begin the Q&A session, and we would ask you to ask your questions one by one. Over to you, Timo.

[Operator]

[Operator Instructions] The first question comes from Marios Pastou with Societe Generale.

[Marios Antonios Pastou, Equity Analyst]

I've got a couple of questions around Slide 8 on your acquisitions. Really, I see there's -- you mentioned there's some slight potential for modernization. So I thought if you could maybe give us an idea of the quality of the portfolio you're acquiring and your CapEx expectations for these portfolios, along with maybe the split between the subsidized and the free financed units would be helpful.

[Lars von Lackum, CEO & Chairman of the Management Board]

Yes, Marios, thanks a lot for your question. So a substantial part of what we have pulled into was, once again, subsidized units. So therefore, we are going to see those units getting off restriction over the course of the next years. With regards to CapEx, as always, it will be in line with our expectation for the full portfolio. And the step-up you're going to see in CapEx as soon as those assets are getting off restriction, which is the case and starting as of 2027 and the following years. So that's something which we have figured into the business guys. From our perspective, that definitely offers substantial rent potential and also -- and therefore, we work definitely in making sure, hopefully you've got that during our presentation, and to be in-place rent. So please don't take the multiple as the multiple on the target rent. It's really the 27 on the in-place rent.

[Operator]

[Operator Instructions] The next question is from Jonathan Kownator with Goldman Sachs.

[Jonathan Sacha Kownator, Financial Analyst]

I just wanted to come back on acquisitions. Are you seeing vendors motivated by the ESG argon, i.e. you think some vendors are selling portfolios because they don't want to have to modernize these portfolio? And does this give you a competitive advantage? That's my first question. Then on the second question, given how strong obviously, the occupancy increase has been, do you think you can maintain over time like-for-like rent growth in the chain of 3% for next year, for instance?

[Lars von Lackum, CEO & Chairman of the Management Board]

Okay. Thanks a lot, Jonathan, for your questions. I will start with the first one, and then Volker is following up on the occupancy question. So with regards to the vendors in the market, once again, and we can just reconfirm what we have already shared during Q1, and it's exactly what you are assuming. We are seeing more and more vendors, which are selling due to a strong understanding that they are lacking the technical as well as the financial capabilities to do modernizations, especially energetic modernizations themselves. So therefore, that was a driver. But also the uncertainty with regards to the tax regime, might -- which might be brought about by the new federal government, you're aware that we are going to see federal elections, 26th of September, is another one. So for private persons especially, if you have a holding period of 10%, you can sell portfolios and capital gains tax free. That's something which is being discussed, whether that might be removed, so that's also a consideration. So the EC as well as the tax considerations, especially for private vendors are the key impetus for now selling into the market.

[Jonathan Sacha Kownator, Financial Analyst]

Okay. Does that mean that you're going to be able to continue to buy very quickly, but do you anticipate it's going to be more complicated next year after the elections?

[Lars von Lackum, CEO & Chairman of the Management Board]

No, I don't think that. So the ESG part is to remain. And I think that's especially with bigger portfolios, which we have seen being brought to the market that ESG was a key consideration. So that's very often with people, which are earning around 300 to 500 units. So quite wealthy people, which are aware that they are lacking technical as well as financial capabilities to do those modernizations. From our perspective, those private people, which are owning between 20 to 300 units or 500 units, most of them are completely unaware of how big the change is being brought about and the requirement of modernization work being needed to really do to those assets. So therefore, our assumption is, as soon as we have that new government in place, that understanding will grow. And then we are seeing even an increase in speed of assets being brought to the market, especially for those from the -- from those ages -- building ages, which we feel comfortable at, so the '50s, '60s and '70s of the last century.

[Volker Wiegel, COO & Member of Management Board]

Okay. And then on your second question, if I got it right, it's on the rent growth due to the high demand for our portfolio in the next year, yes? That was the question I think.

[Jonathan Sacha Kownator, Financial Analyst]

Yes. Well, my question was, can you maintain strong like-for-like rent growth given how low vacancy as the current vacancy -- that's not going to be a driver anymore for like-for-like rent growth?

[Volker Wiegel, COO & Member of Management Board]

Yes. Yes. But the like-for-like rent growth is on a like-for-like basis. So the vacancy reduction is not contributing to the rent growth. And we see strong demand for our units, and we obviously have relettings at very attractive prices reflecting this demand and also reflecting the spendings in turn costs. As you know, we also have general elections in September, and we will come up with a guidance on rent growth in Q4 when we have more visibility on what's going on, on the political landscape. But you are right that we see a high demand. We see a slight pickup in fluctuation in the second half of this year. And we remain confident that we can achieve substantial and attractive top line growth also in the next year.

[Operator]

The next question is from Paul May with Barclays.

[Paul J. May, Analyst]

Just a couple from me. So you've been acquiring lots of assets over the last couple of years with a target of 7,000 a year. Just wondered what the ultimate aim is, what the ultimate target is for LEG? Where do you want to get to, where do you think the portfolio will be large enough when you think you'll have, I suppose, sufficient scale in the various markets? And then secondly, just on the valuation. I think you mentioned 20-some-times in-place rent multiple in line with your own valuations. It looks like your sort of high growth are in that sort of valuation level with sort of stable and high-yielding being at lower multiples. Just checking that it's sort of comparable across each of the various submarkets. And I wondered if you had any idea on where your pricing and acquisition value was relative to sort of previous values or sort of prior values of the assets. And the main reason I ask is just to get an idea of where the market sort of has gone over the last, say, 6 months in terms of the acquisition and the investment market relative to the valuation market, whether there is any sort of disconnect to sort of get a sense of where values might go over the second half?

[Lars von Lackum, CEO & Chairman of the Management Board]

Yes. Thanks a lot for your questions, Paul. So I try to do them one by one and you step in if I'm missing anything. So first one was on acquisition and the ultimate target we have for the different markets. So currently, certainly, we do not have an ultimate target. And we also do not have regional targets. So we are not targeting now more of the portfolios outside of North Rhine-Westphalia than inside. It is due to the strong competition in the market that it is really opportunity-based, that we are acquiring outside North Rhine-Westphalia or within North Rhine-Westphalia. What we can definitely share is that the competition within North Rhine-Westphalia is immense, and there are quite a lot also of funds trying to acquire in North Rhine-Westphalia directly together with asset managers and also in high net worth individuals trying to buy North Rhine-Westphalia. So over the course of the last 2 years, we've identified more good opportunities outside of North Rhine-Westphalia. But there is not a percentage target. There is not an absolute target. We have set ourselves. The only target we have set ourselves is the acquisition KPIs. So -- and that's, I think, filling nicely into your second question with regards to the comparable. So whenever we are looking at acquiring portfolios, certainly, we are splitting those portfolios apart according to the markets, which those assets are being based in. And then certainly, we are looking at those sub-portfolios. And each of those sub portfolios also needs to meet the multiple requirements. But please take in mind that due to the portfolio transactions which you are making, which are most the asset transactions, that we have that 10% uplift because we are paying for the brokers sometimes. But definitely, we are paying for the real estate transfer tax and the other additional acquisition costs. So therefore, that's adding to around 10% and that's the uplift, which we need to take if we are doing asset deals. The last question with regards to the difference between the valuation and the investment market, yes, there is always a timing difference. So the transaction multiples, which have been recognized now in our H1 valuation, those which have been realized in the last half year of 2021. So all the transaction multiples, which we have experienced currently in the markets have not been fully reflected in our H1 valuation. So there is a certain time lag. From the investment activities we are doing and undertaking in H1, we can share and that is also where we were hinting at additional valuation gains also for H2. That market are still strongly developing also on the transaction side. So transaction multiples came up -- came in up and above what we are currently recognizing in our books. Most probably, it will be not as strong as the value increase we have just realized in our books, but it will be there. So there will be additional valuation gains also in H2.

[Operator]

The next question is from the line of Kai Klose with Berenberg. The next question is from Jonathan Kownator with Goldman Sachs.

[Jonathan Sacha Kownator, Financial Analyst]

Sorry, one additional question actually on the acquisitions. I just wanted to hear your thoughts about larger-scale acquisitions. Obviously, you mentioned ESG the driver for smaller scale acquisitions. But given the consolidation in the industry, do you see M&A also as an opportunity for you? I mean, obviously, you've been involved in previous attempt. But is it something you feel that you can still pursue or that there's no opportunities at this stage for you in market?

[Lars von Lackum, CEO & Chairman of the Management Board]

Yes. Thanks a lot, Jonathan. So with regards to M&A, I think what we can show over the course of the last 3 years now, that we are well underway with being focused on portfolio acquisitions. We are not an M&A company. So we have not undertaken since the IPO in 2013 any big M&A. Certainly, we tried one, but we also have some learnings out of that. For the time being, we are sticking to our strategy. That certainly means that we are always looking at opportunities in the market. But for the immediate short term, we have not seen any bigger acquisition opportunity, which we think and of, so therefore, we stick to our current portfolio acquisitions in the market.

[Operator]

[Operator Instructions] There are no further questions at this time. I hand back to Frank Kopfinger for closing comments.

[Frank Kopfinger, Head of Investor Relations]

Yes. Thank you, and thanks for all your questions. And as always, should you have further questions, then please do not hesitate and give us the call or write us an e-mail. Otherwise, please note that our next scheduled reporting event is on November 10 when we report our Q3 results. And with this, we close the call, and we wish you all the best and hope to see you soon. Thank you, and goodbye.

[Operator]

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.