Edited Transcript of FFARM.AS earnings conference call or presentation 12-Mar-20 9:30am GMT

If we zoom in on the number of the markets that we operate in. The Netherlands, our home market, you may be well aware of the nitrogen debate that has been prevailing over the last few months, is causing quite some concern about the future of our ruminant business, a business that had been steadily growing for many, many years and has benefited since the abolishment of the quota. The good part of that is that it is now confirmed by the government that it will not take any forced measurements that are going to reduce animal numbers going forward, but more than likely, there’s going to be a friendly solution in which farmers are going to be supported — some farmers are going to be supported to stop their operation. And this is clearly still causing concern to prevent ForFarmers investing in this sector right now.

Similarly, in the swine sector, we had expected that swine numbers in The Netherlands would be coming down. And what we see is that the warm restructuring is going to have an impact, and it has already had an impact with a number of farmers reducing their animal numbers.

On the flip side, we see in The Netherlands that, in fact, we are making good progress on the environmental situation with both progress in phosphate as well as nitrogen depositions.

Belgium has been also impacted by some of these animal diseases, most noticeably, African swine fever and bird flu, but is now on the recovery path.

Germany is experiencing, to a lesser degree, similar situations as we see in swine in The Netherlands and also has seen reduced demand for feed.

The growth markets that we embarked upon just over 1.5 years ago, Poland has been developing well with significant growth in both poultry as well as in swine.

And last but not least, the United Kingdom, there is still — although the Brexit is starting to get more shape, there is still ongoing uncertainty about what it will mean for farmers going forward in the U.K. We do see there is an opportunity to increase self-sufficiency over time. But again, before farmers invested, they really want to get full clarity, which is not in place yet. In the meantime, we see that the weather has played quite a role in the U.K. We had an extremely mild weather leading to plenty of forage availability and subsequently a reduction for demand of feed.

If we move on to profitability of our farmers, and obviously, as you can imagine, in our sector, that is another important phenomenon that can drive behaviors of our customers. In general, we can say that milk has been very stable throughout the year.

The big deviation, and in this case, positive deviation, has been visible in the swine sector. Profitability has skyrocketed here on the back of, in fact, again, a virus, African swine fever, which has hit mostly China through which over a short period of time, about 50% of the swine population in China has been reduced. And China is 50% of the world market. So 25% reduction in overall supply in China, a major shortage of swine in China, and this has led to unprecedented price increases and opportunities for Europe also to export to Asia. And clearly, not necessarily from a volume point of view but at least from a profitability point of view, farmers have been jumping on the bandwagon and benefiting from that.

Broilers has also grown in volume on the back of an ongoing shortage of swine. Poultry is taking more of a role, replacing pork in the — in a number of cases. It’s — there’s also more exports to Asia, and this actually yielded quite an improvement in the beginning of 2019. But during the second half, we saw a quick deterioration there.

And egg against — slightly lower in the beginning, but the second half an improvement. But the big changes, again, were in broilers with volatility and in swine with a much higher level of profitability now.

Then moving on to what this has all meant to ForFarmers. The good thing is that we can report in very challenging market conditions, we still have been able to grow our volumes with about 1% in Total Feed on the back of the acquisitions we made during 2018. However, like-for-like volume declined and basically, in all countries, except for our growth market, Poland.

When we zoom in to the specific sectors, we see that ruminant had a decline in both The Netherlands/Belgium and in the United Kingdom. We did show growth in Germany in ruminants and also a little bit in Poland as well.

When we look in swine. Overall, a slight decrease with a decrease in the U.K., and again, strong growth in Poland and some growth in Germany.

When we look in poultry. Overall, an increase and the U.K. organically grew well in poultry, but obviously the significant part of the poultry growth has come on the back of the Tasomix acquisition and the organic growth that Tasomix is experiencing in that sector.

So like-for-like compound feed, as you may recall, our profitability is quite dependent on our compound feed. Like-for-like volume declined 3.2% applicable in all countries, except for Poland.

Then moving on to what does this mean financially. As I mentioned, compound feed is important. So overall, for the whole year, including the benefits that was delivered through the acquisition, it’s about 2% growth. But the second half, driven by organic decline, a reduction of 3%.

When we then look at gross profit, the gross profit has been severely impacted by the purchasing position during the first half of 2019, but we did see recovery during the second half. So despite the fact that our volume was also under pressure in the second half, we had more or less a flat gross profit versus the previous year during the second half.

That has led to an EBITDA decline of about 12% for the full year and — but obviously, a positive 11% in the second half. We were positively impacted by the IFRS change in that element. And also, we were supported by our restructuring initiatives that have helped us to bring our costs down during the second half.

The nice and I believe worth mentioning contribution has been in our working capital management. We managed to achieve an improvement of almost EUR 30 million there, which comes on the back of the previously announced plans to focus, first of all, on bringing our best practices in place in relation to getting our overdues and our payments in from customers on time. Quite some progress also on the acquisitions we made in terms of implementing our ways of working.

Secondly, as again, we mentioned before, our plan is to, over time, work with more strategic suppliers who we give more business to and we’re able to make better agreements from a payment point of view, and again, that is helping as well.

Considering all of this and the fact that, again, we have a very healthy balance sheet with virtually no debt and a very strong cash generation, other than coming up with the normal dividend, 50% of our underlying profit which would be EUR 0.19, we’re going to propose EUR 0.28 to our shareholders to recognize the fact again that we have, during this first half, the incident in terms of purchasing. And on the other hand, we want to recognize the fact that our cash flow and our working capital has really been very positive so the fact that we are able to do this.

So with that, I would like to hand over to Arnout who will take us more through details of our financials.

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Arnout E. Traas, ForFarmers N.V. – CFO & Member of Executive Board [3]

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Thanks very much, Yoram. Also, good morning from my side from Amsterdam.

Yes, here on this sheet, you have the overview of the profit-and-loss statement. A lot has already been summarized in the financial sheet of Yoram. I would like to point on the development of the compound feed. If you look at — we have now a 7.1 million tonne volume sold last year. And there you see that the M&A part is slightly more than — or if you look at the ratios of the Total Feed and that’s because the companies we acquired are more focused on compound feed than on the Total Feed solution.

The total EBITDA is, underlying, EUR 88.5 million, as indicated by Yoram by the positive impact of IFRS 16. And that’s also the explanation there partly why you see the depreciation, amortization increasing from 2018 to ’19 is the impact of leases because, according to the new accounting rules, you have to split it in depreciation part and an interest part. And next to that, we have the amortization impact of the acquisitions and also the step-up of the depreciation from the acquired companies next to, of course, the impact of our investment programs to maintain and expand our factories in the countries.

Then walking to the next page, looking at the second part of the profit-and-loss statement is looking at interest that is increasing because of the IFRS impact. Our joint venture in the north of Germany, HaBeMa, which does 2 activities, production unit and also a trading unit, stable results over 2019. On the incidental items, I will come back in a more detailed sheet later in this presentation.

The income tax, the amount is lower because of the operational performance. On the other hand, you see that, at the bottom, the underlying effective tax rate is now 25.4%. That is in line with what we voiced to the market at our midterm results last year. If you compare it to 2018, it’s impacted by 2 elements. In 2018, we had a positive impact of the decision by this government lowering future tax rates so that at that time, a positive impact. In 2019, they made the decision to partly reverse that decision so that had a negative impact. And in 2018, we capitalized a tax loss in Germany. So that was a one-off benefit in the 2018 results.

The balance sheet. If you look at the total assets, then it hardly looks like there was any movement, but part of it is coming from the IFRS 16 impact because we have now the leases on our balance sheet, which is EUR 23.5 million increase, and that discussion is more or less the improvement we made in working capital. You see that the working capital was now at EUR 48.7 million. Especially if you look at the current liabilities, that is the payment terms to our suppliers, and as Yoram already indicated before, because we are bundling volume for our suppliers, in return, we want to have different payment terms, which our working capital is benefiting from.

If you look at the overdue receivables as a percentage, which we always disclose on, yes, how are we proceeding in collecting the money on time, we made a significant step forward, and especially in the acquired companies, we were able to implement the ForFarmers way of working. And as a consequence, we were able to reduce the overdues significantly. You might recall that in 2014, this ratio was around 24%. So we are, again, on the trend, bringing it down.

All in all, resulted in a debt of EUR 7 million, which on our balance sheet, a very small amount of money. We have a new credit facility. We concluded on that in the mid of last year of EUR 300 million. So that gives sufficient headroom for expansion in the future.

Cash flow statement, 2 parts, positively impacted by the working capital; negatively, the operational performance. 2019, we focused on integrating the 4 acquisitions we did in 2018. So that’s why, in this line, you only see the CapEx investments we did in expanding and maintaining our factory and our supply chain from the logistics, the vehicles from that factory.

The change in the net cash flow from financing activity is the consequence of the new facilities. We had to repay loans and got new ones in and we moved from long term to short term. That is impacting those elements.

This sheet gives the indication of the — and I can explain the Alternative Performance Measures. So the 2019 P&L was impacted by several items which happened in 2019 but are not related to the operational performance of 2019, and that’s why we exclude them from the underlying EBITDA or EBIT or net financing element. As well we also did — last year, we have defined very clearly what elements could be included in the Alternative Performance Measures. There are 4 buckets being impairments, elements related to acquisition, restructuring and the other category. And I would like now to run through the key elements of 2019.

First is on the EBITDA level. You see in restructuring a EUR 5.1 million cost, and that relates to the closure of 5 factories and the efficiency program we are running into all countries except Poland. And last year, we reduced our head count by almost 125 people. And what we voiced through the program that it was between 125 to 150 FTEs. So we are well on track there.

The second element I would like to highlight is on EBIT level is the impairment, and the EUR 30 million consists of 2 amounts. First one is we took an impairment on the full goodwill of our U.K. operations because our — we reduced the expectations of future volume growth downwards, and as a consequence, we’re taking a full goodwill impairment. The second part is EUR 5 million related to the factories we closed as an element of our efficiency program.

The third element I would like to focus on is on the net financing results. It’s a positive amount of EUR 13.4 million, and that is — consists of 3 elements. As you might recall, with all the acquisitions we are doing, there is always a deferred payment related to those acquisitions and one of them relates to Tasomix. And we acquired in 2018 60% of the shares of Tasomix and we got a new factory in Pionki available for us starting to produce. And we agreed with the former shareholders that we would pay based on the performance related to a business plan created on the EBITDA of 2019 and ’20, and we would then make a deferred consideration in 2021. Now looking that the start-up of that factory took slightly longer, there is a little bit more working capital involved, and as a consequence, the operational parameters are not met and we don’t foresee that we have to pay that deferred consideration in 2021, and that is now released to the profit and loss in 2019 and that is EUR 8.3 million.

Also, because we acquired 60% of the Tasomix shares, and we have to value the 40% of these shares on our balance sheet based on future expectations, we expected, for the future, a growth in Poland. We still expect that. For the coming 5 years, we still expect a volume growth of 10%. In the past, that was 14%. And because of this decrease, we also released part of that obligation into our profit-and-loss statement and that, in total, is EUR 9.8 million.

Then the last element to get back to the EUR 13.4 million is that those future obligations have to be paid in the future. So that means that you have to discount them now and that is at a discount which gets to a WACC on private equity ratio that is above 10% and that cost EUR 4.7 million, so that has a negative impact on the P&L. But it is all accounting and not cash elements, that’s why they are part of the Alternative Performance Measures.

If you look at 2019, Yoram already gave it in the summary, but we see that it had 2 phases to ForFarmers. In the first half year, the focus, if you look at all elements of the P&L, was a lot positive impact through the M&A of the 4 companies we acquired. Negatively, we had the impact of the procurement position in which we have chosen to maintain market share and not pass on the negative price impact to our customers.

In the second half of the year, there is a limited impact of the M&A, but we see a significant growth in Poland. There, we are really growing in the poultry and the pig segment. And in the second half of the year, in the other countries, we see that the like-for-like volume development is going down. But at the same time, the organization, with the efficiency programs, made significant steps in reducing the cost base to be in line with the volume development, and also we have been focusing on the right product mix by selling more specialty-type of products.

Moving then in more detail to the developments in the different clusters. If you look at the first cluster, which is The Netherlands and Belgium, you see that the total volume — feed volume is almost equal. But there, we have a positive impact of the M&A. This is the Maatman, the Van Gorp and the Algoet acquisition in Belgium on the positive side. But the like-for-like went down in — and that, in total, so we are more or less flat.

If you look at the different segments. Then in the dairy, which is a core element in the Dutch market, we have seen, because of the phosphate ceiling, that farmers reduced their herd size in the first 3 quarters of the year. But especially in the last quarter, they expanded their herd again and also the milk volume started to increase again. But that impacted the compound feed — Total Feed volume in 2019.

If you look at the pig market, and all in all, for this cluster, we are more or less flat, but that is because of the impact of the acquisition of Algoet in this segment, the like-for-like, as Yoram already indicated, that the herd size is decreasing also impacted us.

But from a cost perspective, we have been really benefiting from the fact that we have been — in this cluster been able to close 3 factories. We closed the Helmond factory, moved those volumes into other factories successfully. We moved the Van Gorp volumes into the Reudink factory in Lochem. And also in Belgium, we moved the volumes from the Algoet factory into our 2 existing factories in that country to align our cost base to the volumes.

Cluster 2, Germany/Poland. All in all, as a consequence of the M&A in Poland, you see a significant growth in Total Feed volume, also in gross profit. But the underlying EBITDA is almost flat, including a positive impact of IFRS 16. And at the bottom of this page, we want time disclose the details on the performance of Tasomix. And you see that Tasomix made a significant step forward from EUR 2.3 million EBITDA in 2018 for the second half, EUR 8.1 million in 2019. And we’re very pleased that although slower than expected, the Pionki factory is now filled up to 40%. And the positive elements of the results in Poland are, let’s say, neutralizing what is happening in Germany.

In Germany, we made volume growth in the first half year, but in the second half of the year, we participated less in tendering offers, especially in the pig market because of the price development in that segment. As Yoram indicated earlier, the herd size is decreasing and there is overcapacity and it had, especially, in that segment, impact on the price setting.

The last cluster is the U.K. Volume is coming down. As Yoram indicated, yes, the weather has an impact there on — in the ruminant segment because there was sufficient — the animals were outside and that limits us a possibility to sell feed. It’s also mentioned by Yoram in his summary in the beginning, in the pig market, the volume is reducing, but that has been a deliberate choice. As we have indicated earlier, we are moving a little bit away from the very big customers in that segment because the profitability is not the levels we want to accept, and as a consequence, we moved volume away. And also our customers moved some volume away, but at least we made a step-up in increasing our margin on a per tonne basis in that segment. And also, in the second half of the year, the U.K. operations was able to reduce the cost, and all in all, the EBITDA is flat, but then you have to take into account the EUR 2.2 million positive impact of IFRS 16.

And then I would like to hand it over to Yoram again.

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Yoram Knoop, ForFarmers N.V. – Chairman of Executive Board, CEO & GM [4]

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Thank you, Arnout. I will now take you through the — an update on where we stand with what will be the last year of our Horizon 2020 strategy before we embark on a new strategy. That new strategy we will share that during our Capital Markets Day now planned for May 12 of this year.

Well, first of all, again, where do we stand? One of the pillars of our Horizon 2020 strategy is focused on attractive segments. And again, whilst our volume has been under pressure, it’s very good to see that we see ongoing growth in our specialties. And that is good from 2 angles. Again, we exist because we add value to our farmers. And typically, these specialty products make quite a change in terms of the animal performance, and therefore, the productivity of the farmer. But secondly, they also provide for a healthy margin. So we’re benefiting from a mix improvement in our portfolio.

The second part I would like to point out there is that there is a trend, certainly in The Netherlands, Belgium and in Germany, where more and more, especially ruminant farmers, are requesting that we use GMO-free products. This is the reason that you may recall about 1.5 years, we reopened our plants in Deventer to exclusively have those products with a dedicated mill and that mill is already operating at a high level of utilization. So we really experienced significant growth there.

The second pillar that I would like to point out is the partner and provides the Total Feed portfolio. Two elements. We have really been investing in enhancing our customer experience. And we are doing that through further digitalization and we’re running now a pilot. We started with poultry in The Netherlands and we’re in the process of rolling that out further. The second point I’d like to focus on that aspect is partnerships. We are having more and more partnerships also on logistics where, in a number of regions, we are engaged with outsourcing our logistics to get to a higher level of return loads, and therefore, efficiency in our operation.

Next block is acquisitions. As I’m sure you’re well aware of, acquisitions have but will continue to play a pivotal role in ForFarmers as we believe we want to be at the forefront of consolidation. We made 4 acquisitions during ’18 and a small one during ’19. And this year — or 2019, we’ve been quite occupied, but happy with the progress that we have now fully integrated all those companies. And whilst in 2 smaller ones, we’ve had some issues initially in retaining customers, happy to report that the speed of integration has been very good, and the benefits and the synergies that we’re getting from the integration have been actually better than our expectations. So we’re making up for some of the initial losses that we experienced in terms of customer loss.

Fourth element, One ForFarmers. One ForFarmers is all about leveraging our skill and our best practices and applying that throughout the companies that we operate in. First thing is very important, you probably recall that I’ve been talking about the fact that we felt, over the last few years, that we wanted to get to also a world-class performance in terms of safety and that we weren’t there yet. So I’m very happy with the fact that all of these efforts, both from an investment point of view, education point of view, cultural point of view, are really starting to pay off with a 39% reduction in terms of accidents. I think we show a good sign. And I don’t believe we are there where we want to be yet, so I think there’s ongoing room for further improvement, but we’re definitely on the right path there.

The efficiency program that we launched where we committed that we would take EUR 10 million of our cost base of 2018, we are well on track. As Arnout mentioned, we have now closed 5 of our facilities. Our FTEs, because of those changes, is down by 127. And we are not fully complete yet. So we still have some additional room and we expect to complete and finish that program before the end of this year.

Last point I want to mention there is we have clearly taken learnings from the procurement incident we experienced in the first half. Volatile raw materials is an integral part of our business. And whilst we can never exclude that anything like that will happen — or cannot happen in the future anymore, the probability of that and certainly the impact of that, we believe, will be reduced by the new policies we have put in place.

When we talk about our most important assets and how we are really continuing to plan to win by our — by having the best team in place, by focusing on a world-class team, our training programs have continued to be in full force and expanded. We also see that we’ve made some — finally, some progress in terms of getting to a more diverse organization. A lot of progress still to be made over the next few years, but we are turning the corner there. And also, we see that after a few years, the average age profile of our population is changing. For many vacancies, we are in a good spot to attract people. So we don’t have an issue there, but the good part is that we’re able to attract and to entice many young people to join our organization and our industry.

The heart of what we do is obviously create value for our farmers. And from that point of view, we’re making ongoing further evolutions and sometimes hopefully even more than evolutions in terms of improving the nutritional values with our programs. Especially Apollo is really a step-change improvement in our poultry performance and has helped us to gain quite a few customers.

Last but not least, when we get to results, no surprise that we are not at all satisfied with our overall 2019 performance, mainly coming from the disappointment in the first half of 2019. But despite that, we believe we are able to propose quite a decent dividend, which is, again, a recognition of the fact that we not only pay in this case the 50% of our underlying profit, but we really let shareholders benefit from the fact that our cash generation has been so positive, that our balance sheet is so strong and that we felt we don’t need to let them be penalized because of the procurement incident that we experienced during the first part of 2019.

Sustainability has continued to be important for us, and it’s only getting more important as we all know. And good to see that on many of the KPIs that we set ourselves, and by the way, those KPIs are all that is, that we are making good progress.

On environmental, that progress is a bit mixed. Underlying, there has been a lot of progress, but I must say, given that we closed a number of our facilities, some of the distances to customers have been because of that being somewhat longer. And therefore, our total efficiency was 0, but we would have showed if it would have stayed the same. So underlying, quite some progress, unfortunately, negated by especially customer distance.

But I’ve already spoken about health and safety. Good progress also in the number of feed incidents, really good progress there as well.

Then I want to provide you our expectations in terms of outlook for our sector overall as well as an indication of 2020. Overall, the outlook for ruminants remains quite positive. In most countries, we do expect a certain growth there. Overall demand for dairy products continues to grow. Clearly, The Netherlands is the one where production may be impacted by the uncertainty on the nitrogen situation.

When we look at swine, again, as I mentioned in the beginning, global growth in swine consumption and demand. That is not the case in Western Europe. But Western Europe does play a pivotal role in helping the world to be fed by playing a role in delivering there where there are clear shortages in place. We do expect the swine sector to show a reduction over the next year, especially in The Netherlands and in Germany.

And when it comes to poultry, the outlook there remains positive. Western European consumers tend to consume more poultry at the expense of pork. And again, also on the export side, there are ongoing opportunities for Europe to play a bigger role. Having said that, there is avian flu now in Poland that is clearly bringing the growth expectation of the country temporarily back to more moderated levels.

When we look at the outlook of markets overall, I’m sure we all see that the uncertainties almost anywhere right now have significantly increased. And viruses, in general, obviously, coronavirus as well, play a pivotal role here. Brexit is another uncertainty. We continue to expect that over time we will benefit from that. But again, up until the trade agreement has been made, we really don’t know and our farmers in the U.K. don’t know sufficiently to be able to expand their — and invest in expanding their herd sizes.

So overall, we foresee that Western European markets will continue to be challenging, will continue to be competitive because of the overcapacity situation. That, again, is not applicable in the growth markets, Poland, where we are well positioned to take advantage of good growth over time.

When we then translate that into what can investors expect, what we anticipate is a continuation of the trends that we have seen in the second half of 2019 with volumes like-for-like under pressure in all countries, except for Poland. But ongoing benefits from our efficiency program as well as from our product mix with more and more specialties. And clearly, when we compare that to 2019, we should see a significant improvement versus 2019 first half as we obviously do not have the negative procurement position that we were experiencing at that point in time. As I mentioned, we are planning to share our new strategy with you during our Capital Markets Day planned for May 2020.

Furthermore, I think it’s important to highlight that we are planning to continue to invest substantially in this business above the level of depreciation. In specific, we are planning to invest in enhancing our quality and our differentiation so that especially the customer experience in this more competitive environment becomes even better.

We’re also planning to invest in process optimalization. One of the key elements that we are looking at in our processes is right first time. And we see that in a number of processes. We have significant opportunity, again, to improve that customer experience but at the same point in time, to take costs out of our operation as well.

The progress that we achieved this year in terms of working capital I already talked about, but we feel we still have opportunities to go further there. And that’s what we are planning to deliver also in 2020. The efficiency program for EUR 10 million is on track and should be completed this year.

Last year, we announced to you all that we would do a share buyback of EUR 30 million. That has not been fully completed yet. We do expect and plan to complete that over the next few months.

And last but not least, during the upcoming AGM, we’re also planning to cancel those treasury shares, including the ones that we still are going to purchase. So those — there will not be a hangover there, so those will be built to the market going forward.

So in summary, in quite a challenging environment, so happy to see that we grew our volume on the back of acquisitions by about 1%, that our gross profit recovered in the second half to basically be flat overall for the year. EBITDA, obviously, impacted by our first half year performance, but a nice recovery the second part. Efficiency program is very much on track. Good improvement in terms of working capital. And dividend, as I proposed, that, hopefully, should recognize the steps we have made, especially on the working capital and the operational cash flow of this year.

With that, I think we would like to open it up to questions you may have.

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Questions and Answers

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Patrick Roquas, Kepler Cheuvreux, Research Division – Equity Research Analyst [1]

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Patrick Roquas from Kepler Cheuvreux. My first question is on the outlook. Yes, you’ve not been willing to quantify, let’s say, the outlook for 2020. I think when you look back 3 years ago and then take into account for acquisitions, for restructuring, integration of your plants, product mix improvements and then on the negative part, the volume decline, is it fair to say that there’s limited progress, let’s say, to be expected for 2020 when you compare to 2017 or 2018? So the question actually is will you fully recover the raw material decline that you saw in ’19? And what else are we missing aside from, let’s say, negative volumes?

Second question is also on the volumes. You’ve indicated the potential for overcapacity, or let’s say, there is overcapacity. If we would assume that in the coming years, there’s ongoing volume declines, would that combination lead to margin pressure?

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Yoram Knoop, ForFarmers N.V. – Chairman of Executive Board, CEO & GM [2]

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Now the 2 — you mentioned 2 questions, particularly, that seems to be more like one bigger question. Indeed, if you look at the situation before, do we achieve the same margins as we were before if we had not embarked on our efficiency program? The answer is no. There really are segments, especially in swine. We mentioned, for example, Germany where there’s more competitive pressure than before. So the efficiency program was also geared to address those challenges. And yes, we do believe that in a market of overcapacity, those pressures, at least, for the time being, will continue to prevail up until there is more consolidation because more consolidation is clearly the opportunity and the response to the situation that we are faced. But we feel that we are very well equipped with our positions to — and our size to actually be a winner in this more challenging environment.

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Fernand de Boer, Banque Degroof Petercam S.A., Research Division – Research Analyst [3]

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Fernand de Boer, Degroof Petercam. A few questions on my side. The first one on Poland, you took a kind of impairment on the option value and the goodwill there, stating that you changed your assumption from 14% to 10% volume growth for the coming 5 years. Could you give us a little bit idea of what has been the growth rate in 2019? And what gives you the confidence that given the flu also now, et cetera, that 10% is achievable? That’s the first question.

And then the other one is also impairment related because you fully write down the assets on the goodwill of the U.K. and that was based on a kind of slower-than-expected growth. But what are your assumptions now for the U.K. going forward? You say, okay, because of the Brexit, there is no — the farmers are not really expanding yet, et cetera. But what are your assumptions now for the U.K.?

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Arnout E. Traas, ForFarmers N.V. – CFO & Member of Executive Board [4]

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Okay. If I look at Poland, I would, let’s say, make a distinction there. I wouldn’t see it as an impairment because it is a kind of obligation to the future on the cash we have not paid for the 60% of the Pionki-related shares. And as you have seen that looking at the performance of 2019, we have had a growth of 27% in volume in Poland itself and the current capacity is filled by 40%, and we expect to more or less fill that…

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Yoram Knoop, ForFarmers N.V. – Chairman of Executive Board, CEO & GM [5]

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It’s the new plant.

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Arnout E. Traas, ForFarmers N.V. – CFO & Member of Executive Board [6]

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Oh, the new plant. And we expect, if you look at the 10% in — and in Poland, the market grows between 2% to 3%. And we expect to be above on that because there is sufficient slaughter capacity available today. So that means that there will be new stables coming in and we expect that we can fill that factory in the coming years, and that is reflected in the 10% growth rate. But it takes a little bit more time than in the original plan expected, let’s say, in the mid of 2018. And that’s why we lowered it from 14% to 10%.

Then if you look at the…

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Yoram Knoop, ForFarmers N.V. – Chairman of Executive Board, CEO & GM [7]

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And maybe one thing to also add. When you mentioned impairment, in fact, let’s not also forget that a significant part of that reduction of obligation was also linked to the way how we plan to pay for the Pionki plant. Because the way that we plan to pay the agreement with the seller was that plant did not exist when we made the agreement. So we agreed that we would pay a multiple over the actual results achieved in ’19 and ’20. And given that the start-up of that plant has been lower, we actually now are paying a very low value for a brand-new facility. So we did — we have not paid anything. But because of that calculation, we now release money, but we have never paid that.

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Fernand de Boer, Banque Degroof Petercam S.A., Research Division – Research Analyst [8]

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That’s — I understand that. But at the end of the day, you would have probably liked to have paid it.

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Yoram Knoop, ForFarmers N.V. – Chairman of Executive Board, CEO & GM [9]

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On the Pionki — financially, on the Pionki plant, we are — we now have possession of a very state-of-the-art facility at an earlier stage. So the upside is becoming significantly less on their part than if they had very strong years already. So we’re benefiting in this particular case from the way that the contract has been arranged.

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Arnout E. Traas, ForFarmers N.V. – CFO & Member of Executive Board [10]

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If you look at the U.K., as Yoram indicated, we still expect from the Brexit that the local farmers in the U.K. will benefit. But in the past, we were looking at a 3.6% growth rate and we now have lowered that to 1.6%. That is still higher than on the future expectations in the continent. You can see the details are in Note 20 of the annual accounts where we have it. And also, we lowered the terminal growth rate. So the growth rate over the — after 5 years, that has now been reduced from 1.4% to roughly 1%. So — and those elements had the impact that we had to take an impairment.

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Fernand de Boer, Banque Degroof Petercam S.A., Research Division – Research Analyst [11]

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Okay. Then a question on the working capital, impressive improvement, indeed. But a part of that is also receivables, which I think comes down the moment volumes come down. So I assume that normally, no?

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Yoram Knoop, ForFarmers N.V. – Chairman of Executive Board, CEO & GM [12]

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Well, you can look at working capital as an absolute figure, but we also look at working capital by days. And even in working — also working capital by days, we show a similar figure, similar improvement.

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Fernand de Boer, Banque Degroof Petercam S.A., Research Division – Research Analyst [13]

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Okay. If volumes should pick up, particularly in Western Europe, or stabilize, then that part would be more stable as well?

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Arnout E. Traas, ForFarmers N.V. – CFO & Member of Executive Board [14]

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That’s right. But also, at the same time, we are managing our payables. So we’re slightly long if you look at working capital. So if volume increases, then that has an impact as working capital will increase. We will not be able to neutralize it.

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Paul Hofman, The Idea-Driven Equities Analyses Company – Research Analyst [15]

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Paul Hofman, The Idea. A couple of questions from my side. The first one on the synergy program, EUR 10 million. My impression was always that it was a bit back end-loaded, let’s say, EUR 1 million, EUR 2 million in 2019 and EUR 4 million in 2020, and EUR 4 million the final part in ’21, but you want to finalize it now this year. So the question is also a bit, say, how much did you realize in 2019?

Second question about special dividends. Again, 2018, it was related to the profit from the divestments, but it has become kind of a recurring item now. But what’s the formula behind it? I understand your net debt is low, so your cash flow was strong. But still, the argumentation to come with this, is this something you look at every year now going forward? So what’s the whole idea behind it, special dividends?

Third question is about M&A. I think it’s — we estimate that the contribution from M&A to EBITDA was EUR 5 million, around that. Was there still some restructuring included in that, that was not treated as a one-off?

And then perhaps a final question on Germany. Yes, you referred to the situation there’s more competition. That’s not a new element. You’re still #4 there, so it’s a suboptimal position. Yes, you can strengthen via M&A, but at the same time, I guess you’re also hesitant given all the regulations going forward. So what’s now the agenda there? Is it kind of a status quo? Is it simply sit and wait? What’s your, yes, strategy going forward there?

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Arnout E. Traas, ForFarmers N.V. – CFO & Member of Executive Board [16]

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Okay. If you look at the efficiency program, yes, we are — as Yoram indicated earlier, we are well on track. But you have to keep in mind that closing those factories in ’19, then you don’t have the full benefit yet from that. But we expect, with the full year coming, that in 2021, we will have been able to take out EUR 10 million of the cost base versus 2018.

If you look at the special dividend, I think in 2018 results, the special dividend was linked to the fact that we have sold our arable activities and — because that was — in the future, would have generated cash, which we would have paid out in dividend. And because we sold it, we more or less passed on that same principle. So that was more or less the reason.

I think Yoram indicated why there is a special dividend, and we like for this year and we’ll just like in the future to run the company that we don’t have the impact of a negative procurement positions or other elements. So we have a dividend policy between 40% and 50%, and that is the policy.

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Yoram Knoop, ForFarmers N.V. – Chairman of Executive Board, CEO & GM [17]

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And again, the dividend policy will — obviously will be aligned with the strategy that we will share with you on the — during the Capital Markets Day.

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Arnout E. Traas, ForFarmers N.V. – CFO & Member of Executive Board [18]

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Then the third question, if you look at the M&A impact, is there a restructuring element. If there would be restructuring, they are below the line. But if you look at 2019, there are always integration costs and they are more in the beginning period of those acquisitions and we are now phasing them out as indicated by Yoram. The integration has been completed. So those costs will move out because the integration managers we have — on each project, we have an integration manager. After a year, we move them out into other activities, and that — those costs were included in the EUR 5 million of the M&A.

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Paul Hofman, The Idea-Driven Equities Analyses Company – Research Analyst [19]

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So the EUR 5 million contribution is including these…

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Arnout E. Traas, ForFarmers N.V. – CFO & Member of Executive Board [20]

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Including those costs, yes.

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Paul Hofman, The Idea-Driven Equities Analyses Company – Research Analyst [21]

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Restructuring is not the good word, but integration. But integration costs, do we talk about EUR 0.5 million or a couple of tonnes or EUR 1 million or even more or — yes, can you give some…

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Arnout E. Traas, ForFarmers N.V. – CFO & Member of Executive Board [22]

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Let’s say, it depends by project. Let’s say, in the small one, if you look at the Maatman, it’s very small amounts. If you look at Poland, there is a significant amount. So it’s more in the latter part of the amount you included.

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Yoram Knoop, ForFarmers N.V. – Chairman of Executive Board, CEO & GM [23]

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And I suggest that Adrie responds to the question on Germany strategy.

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Adrie J. A. van der Ven, ForFarmers N.V. – COO of Germany/Poland & Member of Executive Board [24]

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Yes. No, I think it’s the right observation. If you look at Germany, it’s probably very unlikely that we will see short-term M&A possibilities. But the real focus for us will be, given that there’s a lot of pressure in the — let’s say, the swine segment, in the basic fattening areas, we will be focusing more and more on value-adding products. So we will go more into sows, piglets and also concentrates. That is the direction we’re heading for. So basically upgrading our gross margin. At the same time, we have possibilities to use our own plants for that and do with our partners in production and logistics, make it more efficient. So have the higher-value products in our own plant, have, let’s say, the core products as far as we can still compete in toll milling and have external logistics partners to make the German operation also, without an acquisition, more profitable in terms of going forward. Yes, that’s the direction.

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Yoram Knoop, ForFarmers N.V. – Chairman of Executive Board, CEO & GM [25]

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And clearly, we will continue to look for opportunities for acquisitions. And what we hope a bit for that in a more challenging environment, those opportunities will be coming — more open. But again, we can’t count on those coming forward.

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Adrie J. A. van der Ven, ForFarmers N.V. – COO of Germany/Poland & Member of Executive Board [26]

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No. We should not rely on that, yes.

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Caroline Vogelzang, ForFarmers N.V. – Director of IR & Communications [27]

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I’m going to ask a question on behalf of Christophe, Christophe Beghin from Kempen who’s unavailable to be here today. He has 4 questions to start with.

For how long is there an export ban on poultry meat export from Poland to China, South Africa, et cetera? That’s one.

Second question is U.K. continues to underperform, both financially and operationally. Volumes are down by 13% compared to 2015 levels. Underlying EBITDA results are even down by 29%. Despite all efforts, investments, et cetera, we don’t see any material result as yet? U.K.’s compound feed volume grew at a CAGR of 2% over 2014, 2018. NWF appear in the ruminant industry reports 3 consecutive years of stable volumes over the years 2017 up to 2019 — and including 2019. What is your response? How is this possible?

Third question, we see good results in operational cash flow. Expected CapEx is roughly in line with expectations of 2020. How do you look at capital allocation going forward? And what is your priority?

Fourth question, M&A. All acquired companies integrated. Is ForFarmers ready for a new year of M&A? And if so, what is your preferred region, Poland, type of acquisition? Does it still remain nonvertically integrated and midsized acquisitions? These are the 4 questions.

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Yoram Knoop, ForFarmers N.V. – Chairman of Executive Board, CEO & GM [28]

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And maybe starting with the question on the export ban in a number of countries, maybe I give the word to Adrie.

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Adrie J. A. van der Ven, ForFarmers N.V. – COO of Germany/Poland & Member of Executive Board [29]

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For Poland, as far as the avian flu is concerned, the normal rule is that also by the local government, is that after 3 months after the last outbreak, normally export markets are going to open up again. So that’s the answer on avian flu, yes.

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Yoram Knoop, ForFarmers N.V. – Chairman of Executive Board, CEO & GM [30]

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Relating to the U.K., if you were to look at the U.K. figures, you could potentially indeed come to the conclusion, well, are we making enough progress there. But first of all, as Arnout already mentioned, if you look especially in the second half, volume has been very much impacted, impacted because of weather, also impacted because we consciously decided, especially in the swine segment, not to participate in some very low-margin business. So volume was very much impacted. Yet, because of higher margins and lower costs, we managed to achieve more or less the same result as before. So I believe that we are, in fact, underlying, making good progress. And if we are now able to sustain that with some volume recovery as well, I think our results would actually yield that.

The question relating to the comparison to one of our competitors. It’s worth pointing out that, yes, that competitor did show, indeed, the volumes that you indicated, but that includes the impact from several acquisitions that they made as well. And last but not least, I would like to point out that competitor is only involved in ruminant business. And a significant part of the gap that we had in our volumes actually surfaced in the swine segment.

Relating to the capital allocation, I suggest that Arnout talks about that.

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Arnout E. Traas, ForFarmers N.V. – CFO & Member of Executive Board [31]

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We indicated that the CapEx for this year will be EUR 40 million ahead of depreciation. So we are really aiming, first of all, to maintain our factories. Secondly is be ready for — with innovative products to be produced. As Adrie said earlier, moving into more concentrated areas, moving more into the piglet-type of products that requires investment. So that is then the second layer of investment.

Yoram already indicated that we are working on our e-platform digitalization. So that’s also an area where we are investing in to improve and facilitate our customers in the customer experience. So that’s the third element.

Then we are looking at M&A, and everybody knows that — I know that my colleagues are drinking a lot of coffee and it always takes time before that coffee is more or less settled in a bottle of champagne at the lawyer’s office. And when it’s there, we will announce it. But up till then, it will be just coffee what they will be drinking. And so that’s the fourth element of capital allocation. Then we have our dividend as also to reward our shareholders. And that’s the way we look at our allocation of capital. And of course, I would expect that this topic will also be addressed on the 12th of May when the strategy will be — update will be given by my colleagues.

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Yoram Knoop, ForFarmers N.V. – Chairman of Executive Board, CEO & GM [32]

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Okay. Then the fourth question on our M&A activities, how do we look at that? What is the ideal situation? Well, the ideal situation, I would say, is that we find very large, very strong companies because I believe that is the best way to drive consolidation. But really it means that the number of opportunities there is very, very limited. So as you look more at medium- or smaller-sized companies, then the number of opportunities significantly grows.

So ideally, I would say, for us, larger is probably better, which, in fact, lower risk, but we continue to expect that we should not only be waiting and relying on larger. So we will look at the other categories as well.

What markets? Well, you could say that in The Netherlands, our position is very strong and we don’t need anything, which is absolutely correct. And I can tell you, if the right thing comes along where we have a very strong case, very good synergy, we will still look at that as well. Yes, we would like to make deals in Germany and improve our strategic position. But the reality is that, that is, we believe, as Adrie mentioned, not very easy. So yes, we continue to wait. We continue to look. We continue to explore. But we don’t count on Germany very short term, but things can easily or suddenly pop up and we want to be ready then.

Poland is, for us, our growth market. We made, obviously, the step with Tasomix. We are #4 in Poland, but we clearly have a position as a very high-quality with low-cost operations. So we are very happy with that position. We don’t need to make any changes. But if the right opportunities would come along, I’m convinced we would seriously look at that.

So we have an open mind. Again, our balance sheet is very strong. But we also don’t feel forced to having to spend that money. If we don’t believe the case is right and we can reap the benefits, we will be very reluctant.

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Eric Wilmer, ABN AMRO Bank N.V., Research Division – Analyst [33]

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Eric Wilmer, ABN AMRO. I had a corona-related question. Recently, Vion, the meat processing company, mentioned that their cold storage facilities are nearing maximum capacity limits. Should the situation sustain for some time to come, how could this impact your piglets and your calves, let’s say, feed business of, let’s say, new — of young breeds? It’s my understanding that they eat — consume relatively — well, a lot of, of course, protein-rich food.

Secondly, do you see any impact from the higher water levels concerning the raw materials that you are obviously shipping to your plants?

And finally, I was wondering if you also could provide a quantification regarding the buyout schemes that we see from the government, including the EUR 250 million recently announced — or proposed scheme on your numbers.

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Yoram Knoop, ForFarmers N.V. – Chairman of Executive Board, CEO & GM [34]

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The first one, the corona situation, we can report that, up until today, we have not seen any material impacts from corona. We do source a number of raw materials also from China, and those supply chains have thus far been uninterrupted. Obviously, it is causing, as for many of you, quite a concern overall because it’s very unpredictable what will happen over the next few weeks. But we believe, for now, we’ve been able to cope with that with all the questions that we all have going forward, and I believe they will continue to keep us on our feet and obviously have taken the measurements which, as many companies have done, to have crisis teams in place to mitigate through the many challenges that we know about today but especially the ones that we will hear about going forward.

In terms of the specific issue you’ve been talking about with Vion, what we hear that especially cold storage and cold transports to China has become an industry — an issue for quite a few industries. Again, that’s considering that we ship in bulk. This is not affecting our business yet. But again, it’s difficult to indicate that it cannot go — it won’t go forward. But so far, no impact yet.

On the water levels, also there, no significant implication in terms of our supply chain. We’re able to get all of our materials at the appropriate cost in as we have been seeing over the last few months.

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Arnout E. Traas, ForFarmers N.V. – CFO & Member of Executive Board [35]

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The last question is about subsidy, right?

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Yoram Knoop, ForFarmers N.V. – Chairman of Executive Board, CEO & GM [36]

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Yes. The governmental programs. The initial program in terms of warm restructuring of the swine sector was EUR 180 million in The Netherlands. Afterwards, after the nitrogen debate started, and it was not originally intended to do that, but because the nitrogen debate is focused on ruminant farmers, ruminant farmers make up significantly the largest part of nitrogen. However, you could say, swine does play a certain role. And as they had already launched the program of EUR 180 million, they felt, well, quite a few farmers had showed their interest. And if they all, at the end of the day, confirmed that they want to participate, more than EUR 180 million was required and this is the reason that, that was increased by the government to EUR 300 million.

Having said that, only by the end of May will farmers, the ones that have now subscribed through this list, will they actually have to sign that they will stop operation. So many farmers actually don’t want to miss an opportunity. They don’t know whether they will really stop. But they felt if we’re not on this list, we cannot take advantage of that. So quite a few farmers on the list, but up until they signed, yes, we will stop, they can still withdraw. And again, bear in mind that the level of profitability of many of these farmers now is much higher than was previously the case. So there are some that do have to stop because there’s no succession or because they haven’t invested, but there’s quite a few who still have the ability to stop or continue. So up until that decision has been taken by the individual farmers, it’s very difficult to say what the exact impact of this is.

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Fernand de Boer, Banque Degroof Petercam S.A., Research Division – Research Analyst [37]

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Yes. Fernand de Boer, Degroof Petercam again. Could you give us a little bit of indication now the oil price is down to, let’s say, $35, et cetera, what the impact will be on your transportation costs — on energy cost, sorry?

And also, looking at your wage increases for 2020, could you give us a little bit of indication there?

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Arnout E. Traas, ForFarmers N.V. – CFO & Member of Executive Board [38]

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Well, of course, we follow — if you look at the oil prices, we follow the development in the market on what is happening in — normally within the different markets. In the end, it is what our competitors are doing and they all follow different hedging strategies on there when they cover the oil prices, and we are following that and taken by country a decision when to cover or when not. So that is the philosophy on the oil.

If you look at the wages, yes, let’s say, we have to follow, in most — in those countries where we have collective labor agreements, what the increases will be. And at the same time, we continue in our efficiency programs to see that we mitigate the impact on our P&L as much as possible if we cannot pass on the increased wages.

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Yoram Knoop, ForFarmers N.V. – Chairman of Executive Board, CEO & GM [39]

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Yes. And in the U.K., we don’t — they don’t know — there is no collective labor agreement. In The Netherlands, there is one. But actually, that one is applicable for the entire industry. So the 2020 increase has not been agreed upon. Actually, the negotiations haven’t even started, but whatever the increase is, this will be the increase for the entire industry.

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Fernand de Boer, Banque Degroof Petercam S.A., Research Division – Research Analyst [40]

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But to come back on that because this will be the increase of the entire industry, but what we have seen in the past few years is that also feed prices went up, et cetera, but not everybody passed that on. So you were talking about, let’s say, the overcapacity and increased competition in Germany, but what about then the competition in The Netherlands, what do you see? Because last year, you also said we are going to look more at our competitors, what they do with their pricing, et cetera. So what do you see there? And how are you going to act here?

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Yoram Knoop, ForFarmers N.V. – Chairman of Executive Board, CEO & GM [41]

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Well, I can’t predict what our competition is going to do. It’s always a combination of many factors. You already mentioned oil coming down. Well, there is a question, how long are people covered, how long did they buy forward? Is there opportunity to — for some to benefit from the low oil price? On the other hand, we know that, in general, transportation is — has been more scarce in terms of labor there, so you see there inflationary increases that the whole industry is experiencing overall. We are — typically, with all of the locations, our distance to the customer is lower than those of our competitors. So we should have a benefit there.

And then labor inflation, anyone will have labor inflation, in general. Certainly, in The Netherlands, we believe we are the most efficient in terms of productivity. And if anything, we should benefit from an enhanced strategic position if everyone has cost increases.

And certainly, again, say that the volume is under pressure, with the plants we have in The Netherlands, as you have seen also last year, we can take certain plants out. There are still about 25% to 30% of the volume in The Netherlands with smaller competitors. If you are operating 1 or 2 mills and your volume is 5% or 10% down, that is very challenging to then adjust your cost base. So again, if things become more challenging, the ones who are equipped and have a strong cost position typically tend to come out. And again, I also feel if things are becoming more challenging, this will also enhance the chance of further consolidating and — consolidation and some opportunities there.

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Caroline Vogelzang, ForFarmers N.V. – Director of IR & Communications [42]

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I have another last question from Christophe, a follow-up question. He asked, you generate about EUR 25 million EBITDA, excluding IFRS, over the fourth quarter 2019. In the absence of any interruptive elements, do you consider EUR 25 million EBITDA as a realistic run rate per quarter going forward?

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Arnout E. Traas, ForFarmers N.V. – CFO & Member of Executive Board [43]

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And I say, we have indicated, as Yoram have summarized in this presentation, our expectation for 2020 and I would leave it with that.

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Unidentified Analyst, [44]

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But to follow up on that, is there anything special except for this coronavirus and whatever is happening in the world today that is restraining you to give a more concrete outlook?

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Arnout E. Traas, ForFarmers N.V. – CFO & Member of Executive Board [45]

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Let’s say, I think, looking at what we have been giving is the governmental [event], what has been explained by Yoram. You see on one side that from the phosphate, the farmers in The Netherlands are now below the ceiling. They slightly expanded the herd size in The Netherlands. We now have the nitrogen deposition, is not today very clear what’s all going to happen. We have to balance all those elements and that’s why we brought the expectations, the outlook for 2020 as we did until now.

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Unidentified Analyst, [46]

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No. I can understand it, but I can also follow Christophe’s…

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Arnout E. Traas, ForFarmers N.V. – CFO & Member of Executive Board [47]

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He made a very good calculation and a compliment to him. But yes, we have his calculation and our outlook wording.

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Paul Hofman, The Idea-Driven Equities Analyses Company – Research Analyst [48]

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Perhaps a small follow-up on that one. Yes, I thought there was always some seasonality, I mean, just in terms of gross profit, but perhaps I’m wrong. Perhaps you can confirm that, yes or no?

And then perhaps also a follow-up on the purchasing conditions. You look, of course, more focused now, sharpened perhaps your conditions. Is there now a reason that you cannot — let’s say, historic profit levels, gross profit per tonne levels are unachievable? If I now look at the gross profit last year, 2018, it was EUR 44.3 per tonne. Last year, it ended at EUR 43.7, so yes, actually, there was a nice pickup recovery in the second half. I guess it’s also seasonality. But yes, historic levels, are these now, let’s say, with more tight conditions, challenging to reach going forward?

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Arnout E. Traas, ForFarmers N.V. – CFO & Member of Executive Board [49]

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If you look at the seasonality somewhere, it is around — more in the past, it was always that the first half year was a little bit more if you look from profitability than the second half of the year. But it really depends significantly on the weather, especially in the U.K. because if we have cold winters and sometimes we have had them in the past, and that gives a positive impact on the U.K. And especially with the good progress they made in the second half year of managing the cost, then it is going to see what happens. Today, the weather is not in our favor in the U.K.

If you look at the profitability per tonne, I think we are still — if you look at — we are still looking at growing segments like robot milking. There, we still believe we can make the right margins. As also the focus, we are now shifting in the different product categories, we bring that and it really depends on what the market development is in — especially in the swine market, how that is developing. That really has a big impact on the total overall average. But we are looking for the pockets of growth and where our strengths are to benefit. And also what Adrie said, moving into more the direction of concentrates, yes, that helps in your profitability per tonne.

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Yoram Knoop, ForFarmers N.V. – Chairman of Executive Board, CEO & GM [50]

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Yes. Again, to support that, if we say the market is more competitive, that doesn’t mean that margins across the board are under high pressure. There are certain segments where the barriers to entry are lower, for example, finishers in Germany, where you see that competitors are all trying to fill the plants that are really under pressure. But many of the segments where we really add value, I think our profitability is still at the levels that we would expect.

So as Arnout mentioned, first, the plan is to move more and more to those segments where we feel we can really add value, but not ignore the ones either — that we also need to make sure we get to utilization that we require at our plants.

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Caroline Vogelzang, ForFarmers N.V. – Director of IR & Communications [51]

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I’m just looking whether there are any other burning questions from our analysts. I don’t think so. So with that, I’d like to close this analyst meeting, close the audio webcast, and thank you all for listening and thank the analysts for being here and putting their questions to us.

We will be seeing you again, hopefully, on the 24th of April at the AGM, and we will be publishing our first quarter trading update on the 1st of May. So definitely, we will be in contact. Bye-bye.