Earnings Call: H1 2021

Jul 30, 2021

Welcome to Sonae's First Half twenty twenty one Results Conference Call. During the introduction hosted by Mr. Yohei Dolores, Sonae's CFO, all participants will be on listen only mode. After the introduction, there will be an opportunity to ask questions. I will now hand over the conference to Mr. Yohei de la Ries. Please go ahead, sir. Hello. Good morning, everyone. Welcome to our 1st semester results conference call. As usual, besides myself and the Investor Relations team, we have on the call today Uli Almeida from Sonae MC Paul Simoes from Wharton Hugo Martins from Sonae Fashion Luis Motoguard from Sonae Sierra and Christian Weisz from Sonae Investment Management. I will start by presenting an overview of our results in the first half of the year. And at the end, as usual, we will have time for Q and A. So as you all know, 2021 continues to be marked by severe restrictions to all our businesses across several geographies. In spite of the progress in the vaccination plan around the world. In Portugal, in particular, we had another lockdown from mid January until mid April. And since then, we have witnessed a gradual easing of the restrictions, but still with significant limitations, both in terms of store capacity and also opening hours. In total, we had 11 weeks of lockdown this year versus 7 weeks of lockdown last year. This being said, our businesses displayed a very positive reaction, and we are very proud of our operational results this year. Just before diving into the results, a quick note on portfolio management. As you know, these last 6 months have been important in a number of fronts in terms of capital allocation. I would like to highlight the restructuring of our operations in Worten, Spain the increase of our stake in Sonae Sierra the launch of a partnership between Sonae FS and Banco Cite. Obviously, the ability also shown by Sonae IIM to continue to invest in high growth tech companies and crystallize value in the right moment. And also the agreements reached by Sonae MC to sell its 50% stake in MAX MAX for €65,000,000 with an estimated capital gain of €40,000,000 results. I will do this business by business as usual, and then I will talk about the consolidated results for the Sonae MC. Starting with Sonae MC. Sonae MC had a tough comparable as last year our food format benefited from the 1st full lockdown in Portugal that implies the shutdown of restaurants. And Continenza has significantly outperformed the market last year. Nevertheless, total turnover increased 4% year on year in Q2 with a resilient performance of food formats and with other brands such as Hermael and Wells benefiting from a recovery from last year's difficult period in terms of restrictions. In the first half of the year, turnover amounted to EUR 2,500,000,000, a EUR 5.4 year on year growth and a like for like increase of 2.3 percent, a quite solid performance across different banners. And once again, Sonae MC was able to strengthen its leadership position with a market share increase in the period. A quick note to Sonae MC's online channel that registered high growth rates in the first half of the year, around 45%, having also grown in Q2 despite the abnormal peak of demand levels in the same period of 2020. Regarding profitability, underlying EBITDA in the first half of twenty twenty one improved by 7.3% year on year to EUR 235,000,000 representing a margin of 9.4 percent, 17 basis points above last year. This is a result of a strong turnover growth and also a sustained operational profitability profile, diluting the extra COVID-nineteen directly related costs. In terms of store expansion, Sonae MC continued to open stores in its proximity format with new Bombia stores, a total of 6 new Bombia stores up to June the end of June and launched the 1st cashierless store offered by a European retailer, which is called Continental Labs. Free cash flow before dividends stood at 156 1,000,000 over the last 12 months, leading net debt to EUR 664,000,000 at the end of June, only EUR 16,000,000 above last year's figure, mainly impacted by the dividend payment of EUR 140,000,000 in Q2, implying a total net debt to an underlying EBITDA of 3.3x. Moving on to Wharton. At Wharton, the dynamics were quite similar to Sonae MC, with the Portuguese operation decelerating growth after the strong performance achieved during last year's lockdown. In Spain, obviously, total turnover decreased as a result of the downsizing of our operations in Mainland Spain, but the evolution on a pro form a basis was quite positive. Overall, Worten delivered a very strong sales performance in Q2, reaching EUR 246,000,000 more than 4% growth versus 2019 and almost in line with 2020, obviously, with the latter benefiting from extraordinary sales resulting from the first and most stringent consignment period of last year. On a like for like basis, Worten posted sound growth of 1.5% in Q2 with positive performances from both the online and offline operations, including also the marketplace and services operations. In year to date terms, total turnover increased 7 point 5% year on year with a like for like of 14.4%, reaching EUR 5.18 per year. We further reinforced our market share and consolidated our leadership position in Portugal. This positive top line performance and also the restructuring process in Spain contributed to an improved underlying EBITDA that reached €31,000,000 at the end of H1 with a margin of 6%, growing 1.9 percentage points versus 2020. At Sonae Fashion, Q2 was a quarter of clear recovery following the losses experienced during last year's lockdown. Total turnover increased 41% and was practically in line with 2019, a year without any restrictions, obviously, in terms of pandemic. Sonae Fashion proved once again to be a solid performer in a challenging context, gaining market share in its key markets. In year to date terms, Sonae Fashion's performance is also encouraging as top line stood at EUR 130 €5,000,000, 3.7 percent above last year with a like for like of 5.1%. And this is particularly taking into account that in the first half of the year, as I mentioned before, stores were closed for 11 weeks, which compares to the 7 weeks of full lockdown in 2020. An important highlight for online sales, which continue to deliver high growth rates, having reached 17% of total turnover this semester. Overall, Sonae Fashion was able to post an improved underlying EBITDA both in Q2 and in the 1st semester, after a negative Q1, mostly due to the new lockdown in Portugal, underlying EBITDA reached EUR 5,400,000 in Q2 and EUR 1,500,000 in the first half of the year. Moving on to ISRG. ISRG is having a terrific recovery, already surpassing 2019 performance levels, a clear sign that even under this backdrop, the company's banners have truly unique selling proposition. As you know, we have a calendar mismatch vis a vis JV, so we consolidate the company's Q1 accounts, which saw a significant recovery both regarding last year and the year before, with all the banners presenting an encouraging positive evolution. Once again, the online channel played a critical role with a threefold increase and more than offsetting a weaker evolution of the offline channel given the restrictions that we experienced. Overall, the last 6 months showed a very good performance both above last year and also 2019 figures. This top line improvement in the quarter was able to fuel a significant improvement at EBITDA level. This performance implied a much better equity method contribution towards Sonae's results. Apart from the operational performance, I would like to highlight the agreement between ISRG and Depar Village's founders to acquire an 80% stake in this e commerce player for EUR 140,000,000 Bephar Village is a well known online retailer focused on the sale of specialist sports equipment, mainly for cycling, running and outdoor, with sales of EUR 118,000,000 and a profit before tax of EUR 7,400,000 in 2020. Post completion, the 2 founders will keep a 20% stake in their management roles as CEO and also Chief Purchasing Officer, and this acquisition will enhance ISRG's specialization in key sports categories, while significantly increasing its digital capabilities in the sports equipment market and also complementing the ongoing positive developments in its existing banners, namely Sprinter and SportsZone. Also in Q2, ISRG expanded into a new geography by acquiring SUR that operates in the Netherlands with the Perry and Axi banners. This is also an important milestone for the company, an important international expansion move and a clear step towards achieving the vision of being a European leader in sports retail. Now sports on Iciara. As you all know, 2021 continues to be a challenging year for the shopping center industry as lockdown restrictions across different countries continue to impact performance. Nevertheless, I would like to highlight that there have been positive signs of a return to normality every time restrictions are eased as there continues to be strong consumer demand for quality shopping center destinations. For Son Iciara Q2 was also a quarter of recovery with encouraging sales performances in Portugal since the reopening of shopping centers in the middle of April and a sustained positive evolution in the remaining European countries. From an operational standpoint and considering year to date figures, Sonae Sierra's European portfolio recorded an 11.6% year on year increase in tenant sales, a decrease of 12.3% year on year in rents, penalized by discounts in Portugal and occupancy rates continued at very high and stable rates of 97% at the end of H1. Looking at proportional management accounts. Sonae Sierra reported a net loss of EUR 4,600,000 year to date, split between a positive EUR 11,000,000 direct result a negative €15,000,000 of indirect results, mainly due to property revaluations in the quarter. In any case, NAV actually increased for the first time in several quarters, up to €911,000,000 at the end of June, with the net loss that I mentioned previously being more than offset by a positive FX impact in Brazil. For Sonae Financial Services, the 2nd quarter was marked by the launch of the partnership with Banco CTT, as I mentioned before, and the implementation of the new business model for the universal card. Due to this business model change and as the credit back book only started being generated in December 2020, the company's turnover naturally shows a discontinuity that will be mitigated in the coming months with the growth of the credit stock. Nevertheless, in operational terms and with regards to Universal's market share, it stood at 15% at the end of May, the latest data that we have, which compares 14.8% last year. The company also continued its strong efforts to expand its digital footprint, surpassing already 500,000 customers digital customers at the end of June, a 39,000 customer increase when compared to the end of March. Regarding MBS, the insurance brokerage company, it continues to show a strong commercial performance across all channels and geographies, and this results in very strong growth, which is high single digit in Portugal and double digit in Brazil and a significant improvement in operating profitability. Similarly to the Q1, in proportional terms, considering the 50% consolidation of MDS, Sonae assets continued to register a year on year decrease as a result of both the pandemic context and the business model change that I mentioned before with Banco CDT. Overall, H1 turnover stood at EUR 30,100,000 and underlying EBITDA follows the same trend, reaching a negative EUR 3,000,000 in the first half of the year. At Sonaei, the quarter was marked by the sale of parts of our stake in Arctic Pulse for 36 €1,000,000 with a gross capital gain of €12,000,000 and the announcement of the sale together with the other shareholders of Bizdirect for just over €12,000,000 which should be concluded in Q3. BizDirect was already considered as an asset held for sale and therefore, it is not considered both in 2021 and in past comparables. In operational terms, Sonaeum's turnover increased by 11% year on year to €29,000,000 benefiting from the performance of the cybersecurity portfolio and underlying EBITDA also improved compared to last year. In terms of portfolio activity, the company's NAV reached EUR 305,000,000 and apart from the already mentioned activity, SonaeiM entered into the share capital of portainer. Io, one of the most popular container management platforms globally. In addition to this and also not less relevant, H1 was marked by relevant achievements in some of the minority stakes that we hold indirectly, namely CZI, Articul and OutSystems, the 3 companies that reached already Unicorn valuations. Regarding Article, the company recently announced a new financing round of $150,000,000 by some of the existing and new investors at an underlying valuation of $4,300,000,000 Despite being a relatively small transaction, it's also a good sign of the company's strong evolution and potential. Finally, Norsch. Norsch has already published its results last week, I would say a solid set result. The company continued to post solid operational performance in the Telco segment, and the Media and Entertainment segment was marked by the reopening of cinema theaters on the April 19. Turnover amounted to EUR 341,000,000 in Q2, a growth of 6.2% year on year, the Q1 with growth since the end of 2019, supported by a 5% positive evolution in telco and a nearly 50% growth in the media and entertainment segment, driven by the reopening of cinematheres, as I mentioned before. In H1, turnover stood at a total of EUR 678,000,000, a 1.8% year on year increase. Regarding profitability, Q2 EBITDA decreased 2.2% year on year due to an increase in direct costs. As last year, these were unusually low due to some extraordinary accounting of content costs. And in year to date terms, EBITDA stood at EUR 307,000,000, a 1.3% decrease year on year. Overall, net income decreased by €2,000,000 to €43,000,000 in Q2 and more than doubled compared to last year to EUR 74,000,000 in the first half of the year. I will now cover briefly consolidated performance. So in consolidated terms, turnover increased by 5.1% year on year to EUR 1,600,000,000 in Q2, mainly anchored on the positive contributions from Sonae MC and Sonae Fashion, leading to a 5.5% growth in H1 to EUR 3,200,000,000. Following this top line trend in Q2, underlying EBITDA increased 9.9 percent year on year to EUR 136,000,000, mainly driven by the recovery of Sonae Fashion and also the impact of the Spanish restructuring process at Wharton. And at the end of the semester, we reached EUR 246,000,000 11.4 percent above last year. EBITDA reached EUR 165,000,000 in the Q2, a significant improvement versus last year, mainly backed by the operational recovery of the businesses harmed by the COVID-nineteen restrictions last year, also a higher net result of ISRG when compared to 2020 and the capital gain from the dilution of Sonaei M's stake in Articom. This performance led to a total EBITDA in the semester of €292,000,000, a 15.5 percent increase year on year. Overall, direct results increased almost €50,000,000 in Q2 to EUR 55,000,000 and more than EUR 70,000,000 in the 1st semester due to the high level of COVID-nineteen extra costs and provisions registered back in Q1 of 2020. The direct result was EUR 10,000,000 in Q2 this year, positively impacted by Sonae Sierra's portfolio valuations and the dividends increased the dividends received from the direct stake NOS of just under €11,000,000 which more than offset Sonae Sierra's investment properties valuation decrease. All in all, Sonae's net result reached EUR 62,000,000 both in Q2 and also in the semester. In terms of operational cash flow, Sonae's portfolio released a total of EUR 123,000,000 during the last 12 months. These last 12 months saw quite some activity in terms of portfolio management, as we discussed in previous calls. As Sonae reinforced its shareholder positions in Noche, Salsa and Saixeira for a total consideration of EUR 323,000,000 also including Sonae Yang's investments in the period. This was partially offset by EUR 109,000,000 of cash proceeds from asset sales, mainly related with Sonae MC and Sonae MC sale and leaseback transactions. But all in all, Sonae's free cash flow for the last 12 months before dividends paid stood at a negative €100,000,000 €101,000,000 at the end of June this year. Therefore, and after dividends paid, consolidated net debt reached just under €1,500,000,000 still a conservative level of leverage as Sonae continues to hold a solid capital structure with a comfortable financing position, which includes a low cost effect of 1.1%, an average maturity profile of 3.6 years and an LTV of 15%. Additionally, if we look at the leverage profiles of our main businesses, they also remain quite solid and prudent across the portfolio. So MCE reached, as I mentioned before, 3.3x total net debt to underlying EBITDA ratio. Norde maintains its net financial debt to EBITDA at 1.8 times. And Sonae Sierra currently holds a loan to value of 24% and has a very strong liquidity position. So overall, we are quite pleased with the results achieved by our portfolio of businesses this year. These last 18 months have been challenging, but we feel that we are now coming out of this pandemic strong and prepared for the future. That's it for me for now. Thank you everyone for listening and you can now open the session to Q and A please. Thank you. The Q and A session has now started. Our first question is from Jose Rito from Kaxia Bank. Your line is open. Please go ahead. Yes. Hi, good morning to all. And congrats for anticipating the release of the results. So I have some questions on CyMC. So first on the fact that, well, you are facing quite difficult comps. So last year was a strong period. Still, you achieved quite decent like for like in Q2. My question is, if this level of like for like that you are achieving, so slightly positive, could be a good reference for the upcoming quarters. So that's the first question on Sonae MC. And then the second related to the new business within Sonae MC. So these businesses are recovering fast because last year, they some of the stores were closed. So my question is if this business on a steady state are margin accretive to Sonae MC. And the third question on Sonae MC, if you think flattish margin feasible over the coming quarters, even if competition seems to be picking up? That will be my questions on Sanai MC and then I can continue with another on Forte. Okay, Zeyf. Thank you for your questions. I will hand it over to Ui to cover those topics. Hi, Isai. Well, I need to well, I will answer to the very first question. I fail to understand the second one. And the third one, I will start by this 3rd. Going forward, we are totally committed to maintain our margins. We absolutely continue. As we said some years ago, during the IPO, we've been in our margin, and we see that our margins will be stable in the years to come or at least until the end of this year. Going forward in the very first question, well, as you said, the accounts from the second question were very difficult. But we see what we are seeing very positive evolution in our side. In fact, in the last well, in July, we saw positive like for like, and we have at least seen that the we don't see any reason to not consider positive life for life until the end of this year. Regarding the second question, I apologize because I did the second question. Yes, yes. So this new business, I think this is around 10% of Sonae MC sales. If the margin is higher than the consolidated margin of Sonae MC or lower than Okay. The new businesses, growth businesses, as we call them, well, they are evolving quite well. In fact, they suffered a lot due to the lockdown measures written in the last month. But they are evolving quite well. And in fact, in our federal businesses, they provide us with very good margin. But still, as you said, they account for less than 10% of our sales total sales. And the bulk is basically we have those businesses from the food formats and also from wells that are now, which are providing are going quite well, and we see with good prospects going forward. The other formats, of course, the providers were very good good performance as well. But we have other formats we consider in that information. For instance, like Zuul or Note, which are businesses that we are developing in the ramping up phase that, for us, are very critical in the sense that they are reinforcing the cooling power of our food products. So we see those businesses as being very important to enlarge the pulling power of the performance. And they are doing quite well, and we continue to see the margin evolving quite well in the future. Okay. But if I end yes. Just before you go into your follow-up questions, may I just ask everyone to put the mics on mute because we're hearing a lot of noise? And Louis, if you could speak close to the microphone, I think that would also help. Sorry, go ahead. Okay. No, just to understand if on a steady state this business had already been accretive to the margin or not specifically this quarter or last year that it was impacted by the pandemic. But let's say in 2019, if this new business were accretive or not to the consolidated margin of Sunimc? Yes. The businesses are all businesses are accretive. In 2017, we have this, for instance, bagel, our coffee shop businesses business. We suffered a lot due to the lockdown measures, and we didn't sell as much as we sold in the previous year. But the majority of the business are accretive to our portfolio, What is they were in 2019 2020. They we are anticipating this business will be more attractive in the future. Yes, yes, understood. Okay. Then I have a question on Vorten. So this market plays strategy, how much is the marketplace in total of GMV? If you can share what are the average fees that you charge and what is the midterm target for these marketplace as a percentage of total GMV or sales? I'm not sure if you have any specific strategy? So I noticed that you have been adding new products, new categories to the marketplace. So what should be the driver in terms of products? And you see fashion also a possibility? So if you can elaborate a little bit more on the strategy, it will be great. Okay. Paolo, do you want to take these ones? Sure. Good morning to you all. Good morning, Jose. Thank you for the question. Regarding the marketplace strategy, so we have we are in early stages of development of the marketplace. So the percentage of GMV represented by other categories is still small. But of course, we are looking to increase it going forward. Our strategy is to continue to develop new categories, and we should be launching new categories along the next month. What we are trying to do is to build strong verticals per category. So we will be looking into pets, for example, and develop a strong offer there and then market it and then continue to develop verticals as we go along. And with that, widening our offer so that we are a more comprehensive marketplace than we have today and guarantee competitive prices by acquiring sellers as much as we can in the following months. So overall, that's the kind of strategy that we are following. Okay. Any 3 year targets for this? I think it's too early to talk about those kinds of metrics, Jose, to be honest. It's other stages of development. We are very confident that it's the right way for Vorten, very confident on promoting growth. We are currently the leading e commerce website in Portugal. So we want to leverage that traffic base. And we are confident that we will be able to give additional elasticity to the brand so that we can grow. So we're very confident on future growth using this strategy, but it's quite early to say how often we're developing. But can you say if the margin EBITDA margin is much higher than also, right? Well, it's a very different business from 1P Electronics because we charge a commission and but then all the product cost and the logistics and everything else is bared by the seller. We don't have those kinds of costs. The only thing we have is a central team that manages the business. So we do think it's a positive contribution to profitability going forward. Okay. Mainly because it will also allow us to leverage some economies of scale hopefully. Maybe if I can just add to what Paolo said. Worten's digital evolution has been quite outstanding over the last few months. As Paolo said, Gorzon today is the largest e commerce player in Portugal. It's really a company that thinks digital first with a fantastic omnichannel value proposition, also leveraging the stores to serve our customers. And so the marketplace strategy is a key element of the strategy for Bordesen in the coming years, and we have a lot of ambition there. And so it's you are going to hear more about the marketplace strategy in the coming months years. Okay, okay. Understood. Thank you. And finally, on Sierra Quique, just to ask if the company could do further asset rotation or if the level of ownership is okay? And in this regard, the view on the Brazilian stake? Luis, are you there? Hi, I'm here, yes. Good morning. Thank you for the question. So in relation to our asset rotation strategy, we the largest chunk and the most important element of our asset rotation strategy have been concluded. Nevertheless, there are a few selected assets, which where we have a more significant stake than what we usually have on average on our assets, which we will try to seek to reduce over the coming years. We don't think the moment is appropriate right now to complete those processes and that strategy. And but once the market stabilizes, once we have normalized earnings, we will seek to reduce our position in those assets. In relation to Brazil, Brazil is a strategic asset for us. Allianz Sonae is having a very good performance with a very dynamic and driven management team. There are meaningful synergies that we can extract through the interactions between both teams. So we do not envisage sale of our stake in Brazil at this point. Okay, okay. Understood. Thank you. That's all for me. Thank you very much. Thank you very much, Sachin. The next question is from Joao Pinto from JB Capital. Please go ahead. Yes. Hi, good morning, everyone. Thanks for taking my questions. I have 3, 2 on Sonae MC. A follow-up on Jose's question. This positive like for like that you're seeing in July on the overall portfolio, you are also seeing a positive like for like in Iperam Supermarkets. The second question is can you elaborate on how the competitive environment has evolved in the recent months? And finally, a question on capital allocation. You have been very active in terms of capital allocation and sold Max Mad cost brought in Spain, increased the stake in Norge and Sierra. What could be the next big move for Sonae? Also knowing that you want to grow your international presence, if you could tell us in general terms what you were looking for, including if it is in the same sectors you've invested in or in new ones would be great? Thank you. Thank you, Joao. Louis, do you want to start with the MC questions, and I'll take the flat one at the end. Hi, Joao. Regarding the like for like, yes, we saw that we see well, the July didn't yet finish, but we are seeing in the last week, positive like for like, both in hardwares, both in supers and the other formats as well. Regarding the environment, well, pretty much the time that we were witnessing in the last month. But there are some players growing in terms of smokers like in the Carnivine Northern first, but we knew that the situation would happen as they announced the total fleet that we will intend to continue to invest in the proximity format in Portugal. As proximity format is announced, the convenience is the segment is totally under penetrated when compared to other European countries. And also, the segment is showing very good prospects going forward in terms of growth. Well, basically, in December, we don't see much difference between what is happening today and will happen in the next coming months. But what happened, for instance, last year or the last month from this year. The third question, I think, Joao, will be more specific to answer to you. Yes, very good. So on the capital allocation question, I would say that we are quite happy with what we have achieved in the last couple of years in terms of portfolio rearrangement. I think it's the operations that we've done have better prepared us for the future and also better prepared our businesses. Many of the transactions that we did were critical also to achieve the level of results that we are achieving right now because it focuses the management teams on the right markets, on the right businesses. So we are quite happy with what we've achieved. In terms of what will be the next big move. We will see I mean, we will remain active looking for opportunities that match our investment criteria. So high growth opportunities that somehow leverage our existing assets and capabilities, also match our return targets and help us achieve the best possible balance geographically and sector wise. And we will also remain active and attentive in looking for opportunities to maximize value in our existing assets. As you know, we have a flexible investment strategy. We have companies in which we have partnerships. We have companies in which we are 100% shareholders. And so we will remain on the lookout for opportunities that help us maximize the value of our existing assets. Thank you very much. Thank you, Zman. Our next question comes from Antonio Solades from AS Independent Research. Please go ahead. Hi, good morning. Thank you for taking my questions and thank you for the presentation. I have two questions, one related with Sierra. If you could provide more color on the traffic on Sierra if it is evolving as we were expecting or not. So if you can share with us how it is the traffic on shopping center because we have been talking a lot about online and marketplace and so on. So should we be worried about the traffic on shopping centers in the coming future? And second question is related with our problems on Zop, if there's any news on this subject? Thank you very much. Okay. Luis, do you want to start to the Sierra one? Will do, of course. Antonio, thank you for your question. In relation to shopping centers and the recovery of the current dynamic, the best way to think about us and particularly looking at everything that is in the press, etcetera, but the best way to think about us is like a factory that currently is not allowed to operate 2 or 3 production lines. And we are not allowed to operate them because the health authorities or the governments don't allow us to operate them. The machines are in very good form. The raw material is all there. We're just not allowed to turn them on. And that's why when you look at our current performance, it's very difficult to make a judgment on how we can actually operate at full capacity. Having said that, maybe the best month to look for fundamentals is the month of May. Month of May was the 1st month post lockdown, was maybe a month only partially impacted by the Delta variant. Nevertheless, it had material restrictions. But when we look at our portfolio, in the month of May, sales were down by 12% compared to 2019. 12%, so 1%, 2% at the European level, and this was relatively consistent across all geographies. We are also seeing in some centers an outperformance compared to 2019 and some other centers a bit below. But sales were only down by 12%. 12% might still look like a big number and would all like it to be much lower. But when if you take into account that, 1, we have 0 tourism right now and tourism is a relevant part of our shopping centers 2, we still have significant people working from home, meaning less people at the offices. 3, we have the harshest limitations in terms of number of people per square meter in our shopping centers, the harshest limitations in Europe, which means that the shopping experience is not very positive, which means, again, we're not allowed to utilize full capacity. 4, our the timing restrictions are very meaningful. Shopping centers have to close much earlier than they want, again, a limitation on our full capacity. So if you take all of these limitations into account and you look at minus 12% of sales compared to 2019, I think that is a very, very good number. Furthermore, when we look at June. In June, things across Europe maintained the trajectory that we saw in May. Portugal was maybe the only country where things backtracked a bit, again, due to the severe restrictions that we witnessed in Portugal. But overall, I would say that the recovery is very satisfactory. We are very encouraged by what we see. But bear in mind that we still have a few machines that we are not allowed to switch on. And we are very keen to switch them on. Our finger is on the button. And once we can press it, the things are everything indicates that we will return to normality very quickly. We are also monitoring official forecasts from reputable market sources. And the return to normality is not something that we say. The return to normality is something that markets for specialist independent resource sources also confirm will happen in the short term. So lots to do, lots going on, very keen on operating at full speed. We are just not allowed to do that. But we feel that the demand is there and we have fundamental figures to prove that. Okay. Just to clarify, minus 12% was on your portfolio, not just in Portugal, it was on your portfolio in Europe, yes? That is right. That is right, minus 12% across Europe. Okay. Thank you. Antonio, on your second question, unfortunately, the answer there is no. We don't have any relevant news on the legal proceedings in terms of change of decisions from the court. I think the good news is that the company is functioning well, operating normally. We are obviously monitoring the situation and actively engaging with relevant parties, but we do not have anything to announce as of this date yet. There are no further questions from the participant lines. I hand the floor back over to Mr. Oey, Dolores. Okay. So if there are no more questions, I would like to thank everyone for listening. I would also like to thank Jose's initial remarks on commending us for presenting results before the holidays. It was a huge effort on the part of the teams, but we are very happy that we were able to achieve this and present you with our Q2 results at this moment in time. So thank you, everyone. I would like to wish good holidays for those of you going on holidays, and I hope you all remain safe and healthy. Thank you very much, and let's talk again when we present our Q3 results later in the year. Thank you. Bye bye. This concludes today's event. We thank you all for your presence. Ladies and gentlemen, you may now