Hello and welcome to the Grenke AG publication of quarterly statement for the third quarter 2022 call. Please note this call is being recorded. You will be in a listen-only mode throughout the call and have the opportunity to ask questions at the end. This can be done by pressing star one on your telephone keypad. I will now hand you over to Anke Linnartz to begin today's conference. Please go ahead.
Ladies and gentlemen, welcome to our earnings webcast and video conference call. My name is Anke Linnartz. I'm Head of IR at Grenke AG. With me today is our CFO, Dr. Sebastian Hirsch, and we will start off with his presentation and are going to have a Q&A session right after that. I stop here, and I pass the call on to Dr. Hirsch.
Yes. Thank you. A warm welcome, ladies and gentlemen, and thanks for joining us today. Before we start with our presentation, I would like to excuse my colleague, Michael Bücker, who unfortunately cannot join our meeting today due to illness. With regards to our performance in the first nine months of 2022, we are very pleased to say that we are well on track with our planning and our guidance. This counts not only for short-term targets, but equally for our midterm projection. Our new business remains strong and keeps growing. Our profitability in absolute numbers is improving substantially. Our profits are rising, and our cash flow is fully in line with our planning. While the current macroeconomic environment of sharply rising interest rates and high inflation is challenging for many businesses, we see it mostly as an opportunity.
We are convinced that in such an environment, leasing provides an attractive solution for small and medium enterprises sector with clearly plannable lease rates. It saves expensive liquidity and does not burden any credit lines. The behavior of our customers proves this perspective, as we see in the unbroken demand for our services. When we presented our growth strategy in May this year, we defined three key growth drivers for our ambition. Firstly, global growth in both our established and future markets. Secondly, expanding our product portfolio into further areas such as green economy. Thirdly, opening up new reseller channels in these new product segments. After the first 9 months of 2022, I can say with confidence, it's working. We are delivering. Leasing provides a key service to companies looking to grow and invest, especially in these times.
While our services benefit our customers strongly in the current environment, it benefits Grenke even more. We are the leading specialist for small-ticket leasing, and we operate this market with excellent efficiency and profitability. A service provider and partner to over 33,000 resellers, we offer leasing solutions for a constantly growing range of products that meet the current needs of our customers. Our wide and diverse object portfolio, paired with our matched funding approach, spreads our corporate risk across over 1 million individual contracts in 33 countries. This makes our business highly resilient to the current global uncertainties. This is most prominently shown by the fact that despite all the ongoing macroeconomic turbulences, we managed to grow significantly and profitably already for four quarters in a row .
In October 2022, we were delighted to receive our first-time rating by yet another leading rating agency. This marks a new dimension of transparency towards the capital market. Fitch gave Grenke a BBB rating with stable outlook. It's confirming and underlying our investment grade status in the capital market. We continued in the third quarter on our growth path in leasing new business, reaching an increase of around 52% compared to the previous third quarter. In light of our strong new business performance, we adjusted our new business guidance for 2022 in October. Now we expect between EUR 2.1 billion and EUR 2.3 billion, after our initial guidance of EUR 2.0 billion-EUR 2.2 billion. For four quarters in a row , we did not only see continuous double-digit growth despite economic turbulences, we've also seen a continuous acceleration of our growth.
Consequently, we are very confident to achieve our increased new business guidance for this year. In the third quarter, we recorded growth in all of our regions. In our established core market shown here, we achieved considerable growth of around 48%, amounting to about EUR 406 million. At a total of approximately EUR 143 million, our hidden stars markets accomplished a substantial growth rate of over 58%. In our future core markets, we saw the strongest growth, where leasing new business more than doubled. The development of our new business provides us with a strong substance for future earnings. We will see that in our today's contribution margin 2, and in the future in our P&L. Let's now take a closer look at our financials. Starting with our contribution margin 1 and 2.
The effect of the acceleration of our new business is strongly visible. In the third quarter, CM1 is up by almost 40% at around EUR 57 million, while CM1 margin declined slightly by 90 basis points. CM2 increased even stronger by over 45% to about EUR 93 million, while CM2 margin reached 16.4%. Our shift towards higher volumes and number of contracts is paying off nicely. While our average ticket size has increased to over EUR 8,200, we remain focused on our tried and trusted small-ticket approach. Overall, we are very satisfied with the absolute volume development of our CM2, which gives us great confidence for our future earnings. In terms of CM2 margin, we started off in Q3 2021 at 17.1%, shown here, at a leasing new business of around EUR 372 million.
While we increased our leasing new business significantly over the course of the following four quarters, we saw our CM2 margin softening slightly. The reason behind this were, on the one hand, a widening of our focus to a higher volume of larger tickets, as well as the rising interest rates, particularly since the second quarter. This graph also shows how effectively we pass on higher interest rates. While our CM2 margin in the second quarter was still under the impression of increased interest rates, we have successfully adjusted our conditions, resulting in a stronger CM2 margin in the third quarter by 50 basis points already. We achieved this while maintaining high new business volumes and despite further increase in interest rates in our markets. The Euribor interest rate increased by roughly 300 basis points since beginning of 2022, here shown as the two-year interest rate.
Grenke has proven a strong ability to react to changing market conditions while maintaining good margins. Especially for our core business, we will see that, I guess, on the next slide, the small-ticket leasing, the CM2 margin-to-ratio is key to run the business. Small-ticket with a volume of up to EUR 25,000 have always been our core business and make up over 90% of our contracts. The reason for this is simple. We operate very efficiently in this market segment, which translates into a significantly increased CM2 margin compared to higher volume tickets. The strength of our portfolio lies in the healthy diversity, covering a vast amount of high-margin smaller tickets paired with a solid load of higher volume tickets.
For the higher volume tickets, which are also important for the overall portfolio to take care of good and balanced relationships to dealers and customers, the absolute CM2 is much more significant. Our P&L overall is perfectly in line with our plans and our projections that we can see here. Due to a softer contribution of new business to our portfolio in the recent quarters of the pandemic, our net interest income is a bit softer due to fewer lease receivables. Again, the strong new business will drive this in the upcoming quarters. Driven by one-off effects from the impairment of goodwill in Portugal of EUR 4 million, as well as increased staff costs due to company-wide measures to support our employees in dealing with the effect of the high inflation, our costs increased by 5.4% in the first three quarters of 2022.
That lower net interest income paired with slightly elevated cost and one-off effects resulted in a cost-income ratio of 54.3% for the first three quarters. We will take a closer look at it later on. Settlement of claims and risk provisioning decreased significantly, going down by 25.9%, and this is a result of the reliable payment behavior of our customers and our resilient portfolio. Already accounting for the current macroeconomic developments, our corresponding loss rate still improved to 1.3 after 1.7% in the previous third quarter. A further extraordinary effect impacted our financial results this time, however, positively. Due to increasing interest rates in the markets, we saw an improved market valuation of derivative financial instruments for interest rate hedges of EUR 14.1 million.
However, the value of these derivatives is expected to neutralize over their lifetime. Earnings before taxes came in at EUR 83.3 million. Our tax rate increased slightly to 25.8% as the goodwill depreciation in Portugal was not tax effective. Consequently, we reached a net profit of EUR 61.8 million. With this strong result, we are well on track for our annual profit target of EUR 75 million-EUR 85 million. Let's briefly take a closer look to our cost-income ratio to carve out the reason behind the recent increase. The increase in our cost-income ratio is based on three main reasons. Firstly, higher staff costs, as mentioned before. Secondly, the impairment of goodwill in our Portugal business of around EUR 4 million. Thirdly, lower net interest income due to comparably lower lease receivables. Consequently, we reached a cost-income ratio of 54.3%.
This deviation from our initial goals is temporary and mainly a result of one-off effects and reactions to the macroeconomic environment. While we have adjusted our expected cost-income ratio for this year to remain below 55%, we are very confident that this temporary increase is short-lived. Ladies and gentlemen, our risks are fully under control. We recognize the current macroeconomic environment with a conservative approach, which results in a slightly higher risk provisioning across all stages. In the meantime, we see a strong payment behavior of our leasing customers with barely any defaults, resulting in a loss rate, as mentioned, of 1.3% throughout the first three quarters of 2022, after 1.6% at the end of 2021. Regarding rising interest rates, we continue to rely on our proven matched maturity approach. This eliminates interest rate risk and at the point of refinancing.
It also allows us to pass rising interest rates directly on to our customers in the new business. Earlier this year at our capital market update, we already shared with you our ambitions and goals for the years to come. Over the next five years, we want to substantially grow in terms of new business, in terms of leasing receivables, and in terms of CM2 volume. I promised you that we are out of the woods and are now going into a new phase of expansion, and we are delivering. If you look at our balance sheet, you see leasing receivables are rising, laying the foundation for a strong future earning position as initially expressed in CM2. Our leasing portfolio is growing as expected, and we are fully on track to meet our projections.
In the first three quarters of 2022, we delivered on what we indicated at the beginning of the year by turning our strong liquidity position into new business. We saw strong cash flows from payments by lessees of around EUR 1.7 billion and invested almost EUR 1.7 billion into new business. By turning parts of our strong liquidity position into new business, we retained a comfortable cash position of about EUR 0.5 billion , which we think this is the right level to run the company on the current balance sheet volume. As mentioned at the beginning, Grenke is now rated by two leading rating agencies, Standard & Poor's and Fitch. Both with a clear investment-grade rating. As one of our key competitive advantages in the market, we continue with our well-diversified funding mix strategy.
We rely on three key pillars: the unsecured funding, the retail customer deposits at Grenke Bank , and of course, the asset-based funding. We expect the relative share of each of these pillars to fluctuate to some extent as we continue to explore temporary pricing differences between individual pillars in order to optimize our overall financing costs. As in the past, we continue to match debt funding with the underlying leasing contract base. This provides us with a high level of comfort and is shielding us from economic fluctuations as well as changing interest rate levels. Now let's look at our guidance for the ongoing business year and our midterm outlook for 2024. We have ambitious goals not only for the current year, but also for the midterm. As announced before, until 2024, we will double our new leasing business and our net profit compared to 2021.
Of course, excluding the one-off effect of the sale of viafintech in 2021. Despite the current macroeconomic fluctuations caused by the aftermath of a global pandemic and the ongoing war in Ukraine, historic inflation rates and massive increase in interest rates by the central banks, we remain firmly committed to our ambitions and deliver on them. We continue to grow our portfolio and our profit, not only by scaling up but also identifying trends and occupying newly emerging product segments. Next to our strong position in small-ticket leasing, we, for example, successfully work on becoming the leading leasing partner for corporate e-bikes. Also, we are successfully widening our reseller network and aim to expand it beyond pre-corona level. Of course, we keep a close eye on our cost side to ensure we maintain our strong profitability.
Our strong performance in the first three quarters of 2022 is largely in line with our expectations. We confirm our profit guidance, expecting net profit to reach the top half of our guidance. Our equity ratio is very solid at 20.7%, well above our long-standing target of at least 16%. With stabilizing interest rates, we expect our contribution margin 2 to further close in on our long-term goal. Lastly, I would like to give you a brief update on two topics. Firstly, a brief update on the ongoing acquisition process of our franchise companies. After purchasing the franchise companies in U.S. and Singapore last quarter, we are currently running the due diligence and negotiations for the remaining ones. We stick to our goal to finalize those negotiations by the end of this year.
Secondly, with the launch of our new site in Illinois in the U.S. in 2020 through 2023, we are establishing our new growth model for the future. We would like to open a new location in the U.S. in the middle of next year. You have probably noticed that we have made some improvements in how we present our figures this year. Even today, we have increased transparency, for example, by providing a deeper insight into our core business. To this end, we regularly seek a dialogue with you. We have spoken to you on a random basis over the past few weeks and have recorded your comments. We would like to thank you for your time and effort, for your valuable input, and for your support. Currently, we are assessing your feedback.
I'm sure we will derive suitable measures and will get back to you in due course, since our ambition is very clear. We want our communication with the capital market to be even more targeted and efficient. Ladies and gentlemen, Grenke is fully on track for further profitable growth. Even within our macroeconomic environment, Grenke is the number one in small-ticket leasing. This makes Grenke one of the most important financial service providers of investments for small medium enterprises in 33 countries with nearly 2,000 employees worldwide. Thank you very much for your attention, and I'm now looking forward to your questions.
Yes. Thank you very much, Dr. Hirsch. Thank you for your presentation. We are now ready to enter our Q&A session, and I'd like to remind you to register. For a question, just please press star one. We start on our conversation with Marius Fuhrberg from Warburg Research, please.
Yeah. Hi. Thanks for taking my question. Three of them for me. The first one is on the net interest margin, which we saw coming down slightly over the past quarter. Is this an effect of increasing interest rates that you are not yet able to pass forward to your customers on a short period? Therefore, should we expect net interest margin to decrease again going forward, or how should we handle this? The second one, also on refinancing. You mentioned that you got a new rating agency to provide you a new. Is this in preparing to return to the debt market for the short period of time?
Especially when we think of, like, the twin transition three step growth, which is this file, do you expect to return to the debt market in Q1? Third one, on your cash position of the EUR 500 million or nearly EUR 500 million of cash you mentioned, are you able to utilize the deposit facility of the ECB's so in order that this will receive what size interest rate going forward or especially from 2023 onward?
Yes. Thanks for the question. I hope I got all the topics because the sound was not that good when I was listening. The interest margin, looking at margin and you look at interest margin, it should be stable looking forward because we are going for the existing business to hedge our portfolio against interest rates. For the new business portfolio, the rising leasing conditions will bring us higher interest income, and that should cover the higher interest expense we have at the end of the day. From time to time and quarter by quarter, it could be a bit fluctuation as we saw that in that year because of the lower leasing receivables on the interest income side and the fast-rising interest rates.
The time shift between the interest rates on the debt side today, and we are going to put in the high interest rates into our leasing over roughly a quarter. The other question in terms of funding and, of course, the rating action or going for a second rating is to prepare for further funding, to prepare for capital market transaction as always. We are always preparing ourselves for going for several funding instruments. It could be capital market and the debt issuing. Could be Grenke Bank to go for more deposit business and also the asset-based funding. It depends at the end of the day on the market environment on pricing, on interest rates, that we go for that.
That rating is a next pillar for us, a next dimension for us to the capital market. The Grenke Bank funding and liquidity, you mentioned the deposit business, and I hope I got that right. Of course, we are able to go for further deposits to taking that pillar, especially in that times. It's working very well, and that's an important pillar of our funding mix and also important to covering our liquidity we need for further new business.
Yeah, one follow-up if I may on that. I was rather pointing to the fact that the deposit facility from the ECB, the interest rates increased significantly as well and for other banks that have large cash positions.
Sorry, but we can hardly hear you, Mr. Fuhrberg. It's really. May I say that?
Yeah.
We could hardly understand you.
Is it better now?
It's better. Maybe you could move closer to the micro.
I just switched from headphones. I was pointing to the fact that the ECB increased their deposit facility or the interest rate on that, and that the large cash position could result then in a positive interest income from 2023 onwards. Is it correct to assume that?
There will be a shift also on cash positions that you will get, let's say, more an interest income or a positive interest rate. In the past, it was a negative one, but as you may know, it's not the fastest move at that time to rising interest rates on short-term deposits. That will be the case, but it will be not a huge portion.
Okay. Thank you.
Okay. Johannes Thürsam from HSBC, please.
Morning, everybody. Some follow-up questions from my side on funding. First of all, regarding your cash position, we are basically below the normal level where you would say you wanna have a cash buffer of more than a quarter of new business. I expect that Q4 new business should be a buffer. How do you wanna fill the gap until the year end? Secondly, on the funding, in terms of new issues, next year, your two of your AT1 papers are coming to a call date. What is your view? Are you going to call them or are you maintaining this as the rates might be higher in the next years?
last but not least, on the takeover of the franchise companies you're now talking about, should we expect cash payments or rather issuance of new shares? Thank you.
Yes. Thanks, Mr. Thürsam, for your question. At first, when we look to our balance sheet and look into the cash position, we always see per end of a quarter the cash position. In our business on the next day means this beginning the quarter, we are collecting the cash of all the lessees, all the running leasing contracts on a quarterly payment base, and that is roughly EUR 400 million quarter cash incoming. The overall cash we have is on the one hand the cash position per end of a month or quarter and the cash inflow because of our lessees. The stable payment behavior gives us a very good confidence that the cash position on the one hand and the cash inflow is strong enough to cover our business .
The second question in terms of the AT1, the hybrid bonds, we will checking that as always. At the moment it's not the plan to call them, but we are always going to check that on the right time, because interest rates are very volatile at the moment and rising, and so we will check that. At the moment, it is not the plan to call them. The last question, at the moment I expect a cash payment, that will be the best way to deal with that, but could also be another way. At the moment, from today's view, it will be cash payment.
Thank you.
Okay. Thank you.
Now we move on to Mengxian Sun from Deutsche Bank.
Hi, thank you very much for taking my question. Three questions from my side as well. The first one is on the fair value measurement. You mentioned on the conference call that the impact of the fair value measurement should neutralize over the lifetime. Can you disclose or give us more information how long is the duration of the interest rate hedging instrument? This is my first question. The second question is on the cost. You mentioned that there is some one-off cost on the staff expense in this quarter. Can you quantify the one-off cost on the staff cost? Can we also take the cost as a run rate for the next quarter and also into 2023?
The last question is on the acquisition. You said you want to use the cash payment to acquire the franchisee. Can you give us a rough ballpark figures how much will be the cash payment for acquiring the US and Singapore franchisee by the end of the year? Thank you very much.
Yes, thank you very much. At first, in terms of the financial instruments or the hedging instruments for our interest rate risk, the duration is roughly 1.5-2 years. It's quite close to our funding duration because it is a funding hedging instrument for ABCP funding, so for asset-based funding based on a monthly interest rate, as it's common for ABCP funding. The duration for that instruments, it's the same like as the duration for the funding. The one-off impact in terms of staff costs in terms of the one-off payment to our employees is roughly EUR 1 million.
On the other hand, we pointed also out that we hired people to go for further new business, to go for a stronger structure in terms of compliance and governance to fulfilling our growth for the future. So we should go forward with that level also for the previous quarters. Important is now to raise new business again to covering the good contribution margin to bring that income later on back on the P&L as it was also in the past. The last question was in terms of the pricing, US and Singapore. So it was, if I'm right, roughly EUR 1 million, a bit less than EUR 1 million for both the payments, the payout for the US and the Singapore business.
Thank you very much.
We move on to Corinne Cunningham from Autonomous.
Good morning. Thank you very much. Specifically about how you intend to fund the growth going forward. In particular, if I look at deposit best buy tables, you don't seem to be very high up the tables at the moment. Is there any particular regulatory limitation on the percentage of the book that you can fund from deposits? Thank you.
The limitation in terms of deposit business is on the one hand, to get the deposits, that's more or less a question of pricing. We have there a lot of experience over many years. Since 2009, we are dealing with Grenke Bank. The limitation is to bring that liquidity to the leasing business at the end of the day. We are doing that at Grenke Bank with leasing receivable purchase agreements. That you have to do. You have to take care of that. That's a limitation from the volume side. We could do even more. On the other hand, from a strategic position, we would like to cover all funding pillars, not only having one funding pillar, not only fund our business with deposit business.
We would like to be active also in ABCP business and also in the senior unsecured business. Because our experience over several periods is that's a good idea to being active in each pillar because environment could change and then maybe deposit business is not the best one. At the moment, it seems to be like, and so we will raise it a bit. The best way is more that each pillar is a third, a third, a third, the ABCP funding, the senior unsecured funding, and Grenke Bank funding.
Mm-hmm.
Are you okay with that answer?
Yes, thank you very much.
Otherwise, we would move on to the next.
Yeah, not sure if you heard me, but yes, thank you.
Okay, good. Thank you. We'd like to move on to Roland Pender from Oddo BHF, please.
Yes, good morning. Two questions from my side. Could you elaborate a little bit more on the risk provisions on the quarter? Did you have any releases from pandemic risk provisioning, netting out, the volume you put in for the quarter otherwise? I think if I read correctly, you have some new additions, triggered by Ukraine and energy risks. Could you just maybe elaborate on this picture a little bit more? Second question, you had the last month a nice increase, in the number of your resellers. Could you explain how to manage the growth and the onboarding of these resellers? Thank you.
Yes, of course. Thanks for your question. In terms of risk provisioning, on the one hand, we have looked to our portfolio as always, measuring risk, seeing the payment behavior minimum each quarter, four times a year, and I can tell you that the reminder rate or also the missed payment rate is quite stable below the level. Before the pandemic, it was roughly 4%, a bit low, lower than 4%. At the peak, you know, it was 10% during the pandemic. From our portfolio perspective and the things we see in our resilient portfolio, it seems to be that everything is okay. We have to put in macroeconomic parameters into our models and we did, and also we do now.
The main macro-economic drivers are on the one hand, the pandemic and on the other hand, the Ukraine war and the things around that, high interest rates, energy prices. Is there enough energy at the end of the day to go forward with business? That we put into our model, and that's why we adjusted our core model with a so-called management adjustment to the overall numbers you can see here. To give you a bit of flavor, the adjustments of that means the Ukraine war, a scenario of a recession and something like that. It's roughly 35% adjustment, so plus of 35% to our common risk provision we have on the balance sheet.
The second question was the increase in resellers and how to manage onboarding . We are working with more than 100 branches in more than 30 countries with our sales force talking to these resellers. The onboarding is a process, on the one hand could be very physically to visit a reseller, but then it's an online process to giving a reseller access with a portal or something like that, a digital solution to coming to us and to bringing us the business. Of course, we checking the resellers, especially the new ones from several things to going for a KYC process on the one hand also for the resellers and also during the period of lifetime when we working with the resellers. We are always talking to our resellers.
We measure how active a reseller is. There's like a score for the resellers, so we know that a reseller is very active, maybe a reseller is not that active, and then we can plan our sales force activities because of that scoring.
Thank you. Maybe one follow-up on the risk provisioning. Could you give us a number of the underlying figure, maybe for the year or for the quarter, excluding management overlays and add-ons you put into the number?
Yes, you can see that on our tables in the accounts and because of the receivables and just to put all the stages, especially stage one and stage two, because that management adjustment is especially for the expected credit loss. When you split that figure into, let's say 30% and 70%, 70% of that is roughly the common model risk model we have, and roughly 30% of that is the management adjustment.
Okay. Thank you.
Thank you. There's another question from Marius Fuhrberg from Warburg Research, please.
Yeah. Well, two more questions from my side. The one is, in the past, you mentioned some supply bottlenecks with your resellers. Due to that, higher degree of extension in rents, how did that develop in Q3? I have the feeling that supply bottlenecks are not that big of an issue anymore.
The last sentence I don't got, but in terms of supply bottleneck, it is an issue, but it's more or less stable. A year ago, it was quite a new phenomenon, so it impacted our business. From today's perspective, in talking to our sales colleagues in the countries and also they talking to the dealers as well, it's more or less stable. Everybody is aware of the situations, that when you go for new infrastructure for IT, it's not just in time delivering, so you have to wait maybe four or six weeks. It's a stable situation, I would like to say, and not really a change, but everybody is aware of that.
The market means the dealers on the one hand, but also our clients are aware of that. It's more or less part of the investment process today.
Okay. How have extensions of rents developed?
They developed good. You see that also on the P&L. It's also stable over that year, a bit higher than over the last year. It's right to expect that that's a positive impact for our extensions at the end of the leasing contract.
Okay. Thank you very much.
We have also another question from Dr. Hässler from Pareto Securities.
Yes. Good morning. Philipp Hässler from Pareto. I have two questions. Firstly, on 2023, inflation is running at record highs. Maybe you could share some thoughts with us.
How do you expect inflation to impact personnel costs and, other operating expenses in 2023? A quick number question on Q3, minorities were very high. Maybe you could elaborate on this. Thank you.
Yes. On the one hand, we are now in the planning process and, of course, inflation is in terms of cost and also staff cost, not that easy. I would like to say to expect personnel costs of plus 3.5%-5% should be a minimum, fair because of that high inflation we saw in the recent quarters. Also the expectation of the experts today is that it will be more or less stable on a higher level in the mid or at the beginning of the year than the expectation was a bit different, that maybe inflation will come down in Q4 and for the next year. At the moment, the expectation of inflation of all experts is more or less high. I...
As I mentioned, 3.5%-5% on the existing staff. That could be a fair assumption from today's perspective. In terms of minorities, I think you mean the part on the equity side on the one hand and also from the P&L side, it depends on the franchisees because the franchisees on the one hand are consolidated on our balance sheet, are fully consolidated, but we are not owning the share of the franchise companies. As I mentioned before, we are willing to take over all the franchisees and are in middle of the process or may more or less in the end of the process to negotiate that in the due diligence process as we took over Singapore and U.S. That is the reason for the minority.
That is the portion of the franchise companies. You know, on the P&L perspective, you see there the performance of that younger companies in our business.
There's no special reason why it went up quarter-over-quarter?
No, it's not a special reason why it went up. It's a development of the companies.
Okay. Okay.
That means the development and the performance of franchise companies becomes better. That's the reason for that development, because they are young companies, they are also fast-growing, and so the P&L situation of that company has become better.
Okay. Thank you.
Thank you, first of all. I'd just like to remind you that you need to press star one to register for questions. For the time being, I can't see any further questions. I would like to say thank you. Yeah, this concludes our call. Thank you very much for joining us today. As always, if questions spring to your mind after the session, please just email to us. Our new business figures are due right at the beginning of next year on January third. We'd like to say have a great day and best luck. You may disconnect now. Thank you.