Good day, ladies and gentlemen. Welcome to the Q1 twenty twenty Results Call of Prosebens. One Media SE. This conference is being recorded. Today's call is hosted by Mr.
Dirk Voigtlander. Please go ahead, sir.
Good morning, ladies and gentlemen, and welcome to our first quarter twenty twenty results conference call also from my side. Today's call is hosted by Rainer Bourgeaux, Chairman of the Executive Board and Group CFO as well as Ralf Gierig, Deputy CFO of the Group. Rainer and Ralf will first lead you through the presentation and provide an update on the operational development as well as financial performance. The presentation will be followed by a Q and A session. As always, web links, dial ins and the presentation material were made available via our e mail invitation sent out this morning.
With these opening remarks, I now hand over to Rainer.
Thanks, Dirk. Good morning also from my side and thank you for joining our Analyst and Investor Call on Proseventhat one's results for the first quarter twenty twenty. As you all know, a lot has happened since our last call at the March. Today, I'm speaking not only in my role as CFO to you, but also as Chairman of the Executive Board. Since March 26, I have been sharing Executive Board responsibilities with Wolfgang Link, our CEO, SevenOne Entertainment Group, and our Chief Human Resources Officer, Kristine Scheffler.
In my role as Chairman of the Executive Board, I'm representing this board externally, but it is very important to all of us that Kristine, Wolfgang and I are working as one team in the interest of our company. After all, we are complementing our expertise in all the areas that are important for ProSiemSat. One future. Wolfgang with his many years of experience within the entertainment industry will enhance the focus on our core business at the executive board level. We are people's business.
It was a logical step to bring Christina as Chief Human Resources Officer to the Board. And I intend to add my track record in strategic and financial execution, both in times of crisis and beyond. With this, we believe we have established the right setup not only to guide ProSiebenSat. One through the current COVID-nineteen crisis, but also to implement and drive the group's transformation. In my CFO role, I highly value to have Ralf Gierig as our Deputy CFO at my side.
You all know him extremely well and he will also walk you through this presentation with me. So let's start. You all know it, this COVID-nineteen, we are facing a crisis on a global scale affecting our everyday personal life as well as the entire world economy. The International Monetary Fund expects a decline in global economic output of 3% in its latest forecast. Such a decline would be much greater than the ones resulting from the two thousand and nine financial crisis, so that we are now facing the deepest recession since the Great Depression in the 1930s.
Against this backdrop, we will start with a quick overview of the status quo in Germany and see under which conditions we are currently operating our business. We then have a look at the Q1 group financials and end with a summary of our strategic priorities going forward. In the short term, our focus is clearly on dealing with the current economic downturn, and we will show you the measures implemented to guide our company safely through this crisis, all this on a very solid financial basis. Let's start on Slide number three, status quo in Germany. Being a company based in Munich, for SiebenSat.
One is bound in the regulations of the Bavarian government. On March 21, the Bavarian government announced a wide range restrictions that followed the guidelines of the federal government in Germany. Events and assemblies were prohibited and schools and all facilities of leisure time activities were closed. Since April 20, some first steps back to public life have been taken with, for example, some shops being allowed to reopen and school partially reopening. But big events continue to be prohibited until late summer, even our famous Munich Oktoberfest has been canceled.
We have Prozemdad ONE fully supported government restrictions. People's health and safety are the first priority and nothing justifies taking unnecessary risks. We were therefore among the first companies translating the social distancing restrictions into our daily work. We sent around 2,500 employees into home office on the March 16, and we are still working remote until today. Only the employees who are absolutely necessary for our broadcasting operations continue to work on-site under strict health and safety measures.
We quickly adapted our TV productions, e. G, by creating totally new TV formats that fulfill the social distancing restrictions and started to offer new advertising formats for our customers that are appropriate to this situation. Hence, we prepared our company right from the beginning for a possibly longer period of difficult economic conditions. We took early and comprehensive action to manage costs and cash flow. We will come to the details later.
Thanks to the fast and comprehensive actions that our German Chancellor, Angela Merkel, and Bavarian Prime Minister, Markus Soder took, Germany managed to slow down the infection rate and to flatten the curve, as you can see on this slide. The Austrian government reacted equally firmly and with tough but necessary measures, which not only benefited us as a border country, but also our colleagues at the Prosimsat one Pulse four Group. Against this backdrop, we do believe that the picture will brighten up faster in Germany and Austria as it may be the case in other countries. Nevertheless, there is no question that the shutdown of public life has a serious impact on the German economy hitting private consumption in particular. Now let's focus on how the situation affects our business.
Please turn with me to Slide number four. During this crisis, TV clearly is the medium of the hour with reach and view time increasing across all age groups. More than ever, people turn to TV in need of first information and second distraction, and we are serving both. Of course, next to TV also video streaming is now naturally benefiting from the stay home time. If you look at the change in daily reach since the lockdown measures have started, you see that even are the top performers compared to other media genres, with the individual reach having grown by eight, respectively 15%.
And also online activities are quite strong with a plus of 5%. In short, all three core areas of Posenzat one, TV, advertising finance video on demand and online are outperforming print, radio, out of home and cinema. Such figures are putting our business in a promising position for the post corona period. Let's move to Slide number five. However, already during the first weeks in this crisis, two trends became apparent.
On the one hand, some of our businesses are clearly benefiting from the current stay home time as just described. On the other hand, as demand in almost all industries is declining, TV ad spending has been decreasing since the March. Being a system relevant company in the media sector, we, of course, are assuming our responsibility as media company by providing regular, relevant, and reliable news, And we are living up to our mission as entertainment house by providing distraction in form of the best entertainment. We set up a wide variety of regular corona programs on our channel. For example, two ProSieben Spitzial editions on the development of COVID-nineteen each day, which reaches viewers well above the station average.
Our in house production company, RED7, created virtually overnight successful live talk formats and gave the audience the opportunity to ask the individual questions to top viral logit and the responsibility politicians in the studio. This has been something absolutely new and special and shows just how strongly poziedensat one contributes to the pluralism of opinions. And of course, our TV channels are fulfilling people's longing for entertainment. Our latest Sart one hit, Promise Unter Palme, reached up to 6,640,000 people and top market shares of up to 20.8%. Our show The Masked Singer recorded in its second season, again, impressive market shares with 36.9% at the finale last week.
Overall, 10,370,000 people tuned in the last Tuesday to see which star was hidden under the mask. This underlines more than anything else that it is first class entertainment that defines ProSiebenSat. One. Let's look at some of the numbers. All these are March versus February comparisons.
Total video view time, which is the time users spend consuming our offerings across all platforms, increased by a very strong 16%. What's particularly remarkable, especially young adults are tuning against the classic television. The number of daily net viewers between 14 and 29 years increased by nearly 11%. This is even four percentage points more than in the classic target group of fourteen to forty nine year olds. In April, this positive trend continued by the way.
In terms of TV audience, we experienced the strongest April since 2012. Within our core target group of fourteen to forty nine year olds, our programs attracted 10% more viewers than one year ago. Joyn counted almost 4,000,000 unique users by the end of the first quarter, a plus of 12%. The streaming platform's video views grew almost equally strong with 11%. By the way, it was in particular ProSieben.
One's content and channels, which were in greatest demand on Joyn. These video views increased even by plus 26%, a true sign that we definitely understand what our local viewers want to see. Joyn also just offered a free three month trial for our premium version Joyn PLUS. That's a unique opportunity for us to convince our existing customers and new ones of our broad premium library. At the same time, we are confident that our free advertising finance version will gain more and more viewers in times of economic stagnation or downturn with people trying to spend less money.
Next to video streaming, also our podcast universe can be seen as a winner in the first quarter. Its reach increased by plus 50% compared to the last quarter in twenty nineteen. And now, we've also launched the premium audio on demand platform, Fiio, for UAS only, tapping into this market potential. With regard to NuCom Group, due to its diversified portfolio, the crisis affects some assets of our commerce group more, such in the leisure and travel related businesses of car rental comparison and experiences, whereas our matchmaking and many beauty and lifestyle products experienced high demands with multiple customers buying our dating online for the first time. For example, Parship Group counted plus 19% more registrations during the Easter days than during Easter twenty nineteen and implemented on a very short notice the video date, a feature for one on one video communication allowing singles on parship and eLeader partners to date virtually.
All these positive developments are however contrasted by declining TV ad spending. TV core advertising still contributes a 48 share of our revenues. As private consumption currently declined significantly in the lockdown, also marketing spending decreases. So it is not a surprise that the entire advertising market is affected by advertisers reviewing their marketing campaigns in this situation. The bottom part of the slide shows the industries that are relevant for TV and that are currently cutting the most advertising spend.
Obviously, the tourism sector is the one with the highest reduction of 34.9% as closed borders won't allow booking a holiday trip. The building industry and gastronomy suffer from cuts at around 20%. The segment individual needs comprises a mix of businesses covering personal needs, including mainly toys and other types of accessories. Also, the food industry reduced its TV ad spending by around 6%. Let us move to Slide number six.
As just shown, the fact is that television is unfolding its greatest strength right now. It has the highest net reach combined with the highest advertising impact. For advertisers, this means that they can quickly reach a large audience and thus a large number of potential customers. On top of that, with net reach currently increasing, the cost per thousand contacts even declines at the moment. What's even more important for advertisers, in times of crisis, market shares change more quickly upwards and downwards.
Analysis by the German Society for Consumer Research after the last financial crisis in 2009 have shown that advertising customers who despite the difficult environment have continued to maintain a comparably high level of advertising pressure, have achieved an above average return on these investments, they gained market share. Winning brands thus acted counter cyclically. In periods of recession, they launched more new products and increased their advertising investments. In addition, they specifically targeted the acquisition of new customers. In contrast, cutting off advertising during the crisis lead to losses in both market share and sales.
And these will be difficult to recover even in the long term. Keeping this in mind, I hand over to our Deputy CFO, Ralf Kehrig, for the group financials.
Good morning, ladies and gentlemen.
Let me start my part of the presentation with the revenue overview for the group and our segments. Please be reminded that we renamed the Entertainment segment to seven-one Entertainment Group. Now group revenues in the first quarter have slightly increased by 1% to €926,000,000 While we have seen an overall good and satisfying development until mid March, fully in line with our initial full year 2020 targets. The worsening of the COVID-nineteen crisis and implementation of lockdown measures also in Germany had a visible negative impact on the SevenOne Entertainment Group and some of our NuCom assets since then. Sevenone Entertainment revenues therefore declined by minus 3%.
This development reflects a 6% decline of core TV advertising revenues and an increase by 14% or €15,000,000 of all other segment revenues combined. Despite overall softening ad trends, the digital and smart advertising revenues again posted strong double digit growth of plus 32%. Red Arrow Studios achieved a stable revenue performance. Within this segment, revenues of the Production business declined by 16%. Whilst we saw first postponement of Productions, the revenue development is primarily a result of tougher comparable figures in the last year when the production business grew 41%, especially as a result of higher volume of scripted productions in The UK.
Global sales and Studio71 together fully offset this decline, which led to a stable segment revenues of €134,000,000 Last but not least, NuCom Group both benefited from solid 8% organic revenue growth and consolidation effects related to Around Home, which helped the segment to grow 15% overall. While assets like Billiger, Meatwagen and Around Home were already negatively affected by the COVID-nineteen crisis and lockdown measures, strong growth of other portfolio assets like Zacuni, Windstar, Parship Group more than compensated this development. Please now turn to Page nine. Group adjusted EBITDA declined by 17%, which can largely be attributed to lower advertising revenues of the sevenone Entertainment Group. Since cost measures have only been implemented at the end of the quarter and hence did not have a compensating effect yet, the drop through from lower advertising revenues was meaningful.
Please also note that we recognized bad debt related to seven ventures in the mid single digit million euro range, which affected the profitability of the segment as well. On the other hand, Red Arrow Studios posted a flat adjusted EBITDA development, in line with the development in the external segment revenues. Despite targeted better profitability at eHarmony, a less favorable business mix as well as continued growth investments somewhat burdened the adjusted EBITDA development of the NuCom Group. The reported decrease has basically been caused by a pronounced revenue decline in the high margin online car rental business Billiger Midwagen. All other assets combined delivered an earnings development largely in line with our plan.
Last but not least, I would like to comment on a new disclosure of the reconciliation result, which primarily includes the holding cost of ProSiebenSat. One Group. As can be seen on the slide, the results amounted to minus €8,000,000 in Q1 twenty twenty after minus €16,000,000 in Q1 twenty nineteen. We now continue on Page 10. Let me now continue with a couple of comments about our P and L items below adjusted EBITDA.
Most importantly, the adjusted net income development largely reflects the before mentioned decline of group adjusted EBITDA in the amount of €33,000,000 In addition, a higher loss from the joint JV in the amount of minus €14,000,000 had an impact on the group's adjusted net income too. I would like to remind you that the result from the joint JV last year was still limited to around minus €8,000,000 as launch costs had not affected its result yet. In this context, I would like to highlight the good progress we have made with Joyn over the past couple of months. In the meantime, the product is being used by about 4,000,000 unique users, as Rainer already mentioned, which is about 10% of our TV audience. We therefore continue to see this investment as strategically important and are therefore committed to continue to invest in the JV.
The decline in reported net income by €85,000,000 is mainly due to an overall lower operating profitability as well as a decrease of other financial result to amount to minus €9,000,000 largely resulting from valuation effects. Last but not least, let me comment on the development of our free cash flow before M and A. Compared to the prior year, we could achieve an improvement by €33,000,000 despite a decline in operating profits, showing that our strict cash management pays off. Our focus on cost control and cash flow management will continue throughout the year. On Slide 11, we would like to provide you an update in terms of the group's liquidity, the level of net debt and financial leverage as well as the debt instruments in their maturities.
Given the before mentioned slightly negative free cash flow before M and A, group net debt increased slightly from €2,245,000,000 to €2,294,000,000 However, most importantly, the group had significant cash and cash equivalents in the amount of €898,000,000 as well as an undrawn RCF in the amount of €750,000,000 at the end of Q1. Since then, to strengthen further our liquidity position, we have partly drawn the RCF in the amount of €350,000,000 and thereby secured access to our liquidity reserves. The group still has remaining €400,000,000 of RCF available, which offers additional substantial financial flexibility. As can also be seen on the slide, the lion's share of the group's debt will only mature in April 2024. Only senior notes in the amount of €600,000,000 will mature in April 2021.
While we could make use of the cash reserves and liquidity resulting from drawing the RCF, we are also preparing alternative debt refinancing of this instrument. In addition, I would like to highlight again that the group's financing instruments are without any maintenance financial covenants. With this, I hand back to Rainer.
Thank you, Ralf. Let's now focus on the countermeasures we have taken to position our company securely in the crisis. But first, let's talk about our strategic priorities going forward. In the short term, the focus is clearly on weathering the storm that is going on around us. We have taken strong and decisive countermeasures, which I will run you through in more detail in a moment.
But I'm also looking ahead. We have strong fundamentals in place and I'm convinced that COVID-nineteen also presents an opportunity for us to take advantage of the lasting changes in consumer behavior, which we are likely to see. Entertainment is at the core of our business. We have a market leading position in what we do in the German speaking countries. But we have to make more of our core competencies.
Having Wolfgang on the board and working together closely will be immensely helpful in this respect. We have spoken about synergies between our businesses before, but I want to increase the focus on these. To this end, my colleagues and I will review each and every part of the group and its contribution to the core and vice versa. As a consequence, we will continue to implement portfolio measures as we have successfully done before. But to be absolutely clear, we will do this at the optimal point in time to realize or crystallize value for our shareholders.
You will also have heard Prozem Zad von talk about transformation before. There have been some success stories. We have continuously diversified our group revenues in recent years, so that today only 48% of our revenues depend on TV core advertising. We are focusing more on our digital reach. In less than a year, we set up a new streaming platform for Germany, and our digital viewing time grew by plus 30% in 2019.
And Europe wide, we are in a leading position in smart advertising and addressable TV, which clearly helps us to better monetize our reach. Going forward, we will review all strategic initiatives for midterm financial impact, in particular with regard to the return on capital employed and sharpen the focus on implementation and execution. My colleagues and I want to see measurable progress in what we do and we work hard on accelerating this progress wherever this can be done. The fact that our channel Prosimum was market leader in prime time in April, something that has not happened for seven years, is a first step here clearly showing that our focus on local production is translating in the market share gains. Furthermore, we keep driving our data strategy with implementing our single sign on solution, seven Pass, in all our apps.
Please move with me to slide number 13, where we show you the countermeasures we have initiated. The first priority is on making our company storm proof. As mentioned in recent trading updates and today's press release, we are preparing ourselves for several crisis scenarios, including a long lasting and material macro downturn. As a result, we have implemented several cost and cash saving measures, which we will adjust to the level of our revenue development. For the time being, we decided other than previously planned not to increase our program costs, but to reduce it by €50,000,000 from €1,030,000,000 to €980,000,000 We think this will not harm our audience share or ability to generate eyeballs both on TV and online as our key competitors RTL Group and the public broadcasters currently have limitations in terms of live sports broadcasting.
We also have good flexibility resulting from library content, which is reflected in our significant program assets of more than €1,000,000,000 Other measures include the reduction of personnel expenses, such like through the short time work instrument, the reduction of other operating expenses like marketing, consulting and travel, or the postponement of growth projects. A summary of these measures as well as the assumed impact on costs and cash can be seen on the right hand side of the slide. It is worth mentioning that our cost structures of our three segments differ meaningfully, which the graph on the left hand side of the slide shows. While the seven point one Entertainment Group has a large part of approximately 65% of larger or rather fixed costs, the largely fixed cost base of both Red Arrow Studios and NuCom Group is limited to 15% to 20%. This being said, a pronounced decline in advertising revenues in the Entertainment segment would lead to a notably higher drop through in terms of earnings than a revenue slowdown of Red Arrow Studios and the NuCom Group, where costs are, to a larger extent, revenue related.
Please turn with me to Page number 14. As we have already communicated April, we are expecting our business to be heavily impacted by COVID-nineteen across all segments. The last two weeks of March already saw first effects. For the month of April 2020, TV core advertising revenues were down by around 40% compared to the previous year. Red Arrow Studios business continues to be impacted by postponement of production, while there's a mixed picture for NuCom Group with some assets being more affected by the restrictions of public life than others.
Our financial outlook 2020 for March was explicitly made without considering the possible negative implications of COVID-nineteen. Due to the significant economic uncertainty that results from the pandemic with regard to the duration and severity, it is currently not possible for us to provide a reliable outlook for the second quarter and the full year, and we therefore withdrew our financial outlook for the full year 2020 on April 22. We also decided together with the Supervisory Board on April 22 to propose that Annual General Shareholder Meeting to not pay out a dividend for fiscal 2019. This step ensures liquidity also in a possibly longer lasting COVID-nineteen crisis of an additional €192,000,000 What's important? This is a onetime measure, and we, of course, do confirm our dividend policy with a payout ratio of 50% for group adjusted net income.
This is not a decision we took lightly, but it was the right decision because it is our responsibility to protect our business and our people in this extraordinary situation. Our Annual General Shareholder Meeting will take place as originally planned on the June 10. But this year, in form of a non physical meeting due to the governmental lockdown measures. After all, the health of our shareholders and employees is our top priority. All these are extraordinary measures in extraordinary times.
And you can be assured that we are extremely focused on our costs, liquidity and cash flow management and on identifying additional revenue sources as we did during the last financial crisis when we invented our media for equity business model. All this to build a base for Poseidon's AD1's future. Please turn with me to Page number 15. Corona won't be in our lives forever. Even if we don't know when, one thing is for certain, it will pass.
We are already now focusing once the situation is normalized on continuing to execute our strategy with high speed and a top priority on our entertainment business. We want to focus more on what we are really good at, entertainment and infotainment in all its facets. This also means driving local content and digital innovation, creating even more synergies with Joyn, Red Arrow Studios and NuCom, all this to strengthen and monetize our reach. Above all, our goal is to achieve sustainable and profitable growth in the Entertainment business, by far our biggest contributor to revenues, earnings and cash flow. With respect to our other businesses, especially in this situation, it clearly pays off to have a more diversified portfolio and be less dependent on advertising.
But as I mentioned earlier, we will test each part of the business to see whether it is accretive to the overall group. In this context, when the market returns to a more normal state, we will look at our portfolio across the group and analyze if we still are the best possible owner of the individual assets and where we can crystallize value. For example, in case of the envisaged IPO of the dating vertical, once we have realized the benefits from integrating the Meet Group with our existing operations, Parship and eHarmony. Please note that the Meet transaction is subject to shareholder and regulatory approvals. Finally, and I cannot stress this enough, we will focus much more closely on execution.
This, in particular, applies to the strategic measures we have announced as part of our transformation program. We have already had a number of successes, but we need to sharpen our focus on the measures and accelerate them whenever this is feasible. In all this, our objectives are clear. We will put a greater focus on profitability, cash flow and return on capital employed throughout our entire business. With SevenOne Entertainment Group, we are aiming to create the leading entertainment player in the German speaking countries by combining all our three pillars synergistically.
Hence, of course, we want to create long term value for our stakeholders. These are surely extraordinary times for all of us, But we are doing everything we can to guide ProSiemstat one through this global crisis and we are convinced that we are on the right track with the measures we have initiated. Our employees are putting every energy and effort in adapting our program, sales offering, production, and NuCom Group services and products to this continuously changing situation. My colleagues and I are extremely grateful for this extraordinary engagement. You can only master CRISIS as a strong and committed team, and we at ProSiebenSat.
One having everything it takes to do so. Thank you very much for your attention, and please stay safe.
Again, to ask a question, please press star one. We will pause now for just a moment to assemble the queue. We will take our first question today from Julian Rock from Barclays. Please go ahead.
Yes. Good morning. First question is anything you can tell us on May trends? I mean, Germany has eased confinement rules. So have anything changed post that, especially advertising?
That's my first question. The second question, Rainer, you said a couple of times that you'd look at portfolio to see whether you're the best owner of the asset, so potential disposals. You mentioned focus on entertainment, but you also said it'd be good to be diversified. So can you give us some initial thought about what you think is core, noncore? I mean, you've mentioned an IPO of dating, but will you try to sell international production again?
Some more colors would be great. And then the last question is how much cash do you need on your balance sheet to be comfortable operating on a day to day basis? Because I guess the answer is not zero. Thank you.
Well, thanks, Julian. Let me start with the first question. May trading, you're totally right. We have announced today that April is minus 40%. If you would have asked me yesterday, I would have said that the minus 40 is a number which is also a number which is not bad as an orientation for May.
But we also have to see how the development after the change of the rules in Germany is changing. So we don't know. We have seen some add on bookings, which are okay for May, but we also have a way to go. And for us, more relevant is what is happening in June, July, August and so on. And that's the scenarios where we prepared on.
We already have said that I already said that in my speech. We have different scenarios. We are consequent on costs, and we have done everything to make ourselves ready also to last a longer crisis. To your second question, yes, when we look at our portfolio, and I also said that in my speech, we clearly have to look on synergies. What kind of synergies we can use?
We have also said in our announcement that we will concentrate on the German speaking areas and the content in the German speaking areas. And then we try to search the highest synergies for NuCom, Red Arrow Studios, Studio71 and everything else. And that's the approach. And we have to see what can play in. Could Red Arrow Studios in The U.
S. Play in? Yes. If they concentrate their formats also for the German speaking areas. Is this a good format?
Yes. And we have to see how this will develop. And I only would like to mention that we consequently will look on our portfolio. For matchmaking, it's obviously clear because matchmaking, that's getting a size, a very international business where our TV advertising out of entertainment is not as helpful anymore in a certain time of period. Currently, it is because Elite, the partner, partnership, all these are companies.
And that's how we look into it. And but the first step, and that's what you also have to have in mind, is that we have to get good through the crisis. We are not ready for fire sales. You also asked me about our balance sheet. You have seen that we have already drawn €350,000,000 of our revolver.
We have another €400,000,000 So our cash position is very strong. And that also works a little bit together with the third question, how much money do I need on the balance sheet? And that's perhaps the question for my partner here, Ralf, who, for sure, also is responsible for treasury.
Julian, I think the short answer is, given that we have the RCF available, the number can be nil, yes, because the RCF provides a very flexible instrument. And you should also know that we are operating group wide cash pooling, yes? So we centralize the cash. Obviously, intra month, we need to cater for working capital needs, yes, for swings, yes, when are the payments made and when are the revenues received. But this is a very small amplitude, I would say.
So yes, given the RCF, yes, the short answer is zero.
Raf, when you say small impact to the working capital, surely, you can't operate with zero on the balance sheet. So when you say small, do you only need €10,000,000 to operate? Or is it 50
Yes. And you have to see, we don't have a lot of trapped cash. So what we're doing currently is that we collect everything together. And I centralize that in our current situation, you always need EUR 40,000,000 to 50,000,000 approximately as a number to play with. On the other side, we always have in that what Ralf wanted to mention.
We have a lot of flexibility on our balance sheet to elect more money if it's necessary. But this EUR 40,000,000 to 50,000,000 is a number which is not wrong. I come out of machinery industry. If you have a very international business, then you have trapped cash somewhere around. This is not a huge amount of money which we have.
Our next question comes from Stefan Klepp from Commerzbank.
Yes. Hi, good morning, gentlemen. I have three questions, if I may. I appreciate that you're not able to guide for any revenues, but can you tell us what kind of SG and A cost you are budgeting for this year, last year at roughly EUR 1,200,000,000.0? Secondly, I would like to know if you are starting to divest some of the assets maybe in, let's say, 2021 when times are better, should we expect that you're deleveraging your balance sheet?
Or should we expect that you pay it to shareholders? And the last one is I would like to know what kind of dialogue, particularly you, Rainer, as having taken over, you have with the Italian and the Czech majority shareholders at the moment.
So let me start with the second question, the first one, then Ralf will take it. When we divest, for sure, we first start, we'll look on our deleveraging because at the end of the day, we always have communicated that we want to be an investment grade company. So that means that we have clearly, on a net debt to EBITDA ratio, between 1.5x and 2.5x. So 2.5x is not the right number, which I feel comfortable with. But at the end of the day, clearly, we are an investment grade company.
But I will have to mention, depending on the EBITDA development, the relation can be worse, and that's a little bit the situation. So the and then what is also very relevant, we have cut our dividend for this year, means for 2019, the payout. But we will be a company who will pay a dividend again because that's our participation because we believe a dividend is an important piece. And our dividend policy, only to remind you, is 50% of our adjusted net income. And that's what we stick to and that we want to get back to.
So third question, dialogue with MediaSet and CMI, both are shareholders. We always offer meetings on a regular basis between me, the IR team. So we always do that after these calls, and we always do that. On the other side, with Mediaset, we are also in the alliance with Studio71. So therefore, we have also constant points to talk to each other.
If you ask me if we are already in negotiation, no, we are not. So this discussion never happened up to now. So at the end of the day, the situation is as it is. And with Daniel, for sure, he's also one of our major shareholders. For sure, I'll also talk to him as I do to all other shareholders who are interested in talking to me because that's my job and my clear understanding that we need and want to have a good relationship to everybody.
Because again, every idea someone has is something which can be helpful. And shareholders are normally very smart people. People especially investing in us are smart. And we hope that more people get into it in the future and because we also see that there's more value. So therefore, in our opinion, that's our positioning to that point.
So Ralf, first question?
And Rainer, can I just follow-up? Rainer, what's your personal stance then on the media for Europe Alliance? I would like to know about that as well because we never spoke about that. And now in your new role, it's probably very important for all the participants to learn what you think about that.
Yes. Honestly, for me, it's always, first of all, you have to have something on the table, then you have a look onto it, you validate it. We have to take a stakeholder approach. And that's what we always would do. But currently, there is, for me, at least nothing on the table.
So therefore, I can't judge it and because I always believe if people have this idea, could be smart. But then we have to see what our interest, as we already said, we are a company which is well positioned in the German environment. We are mission critical here in Germany. We are a Bavarian company. Our stakeholders and all the people in Germany love what we do.
And then we have to see what the outcome could be. And let's discuss, let's put something on the table. But officially, there's nothing there. So therefore, I'm not commenting rumors. And that's my positioning to it.
Sure.
Okay. Stefan, with regards to your first question on SG and A, I think as we already outlined in our presentation, we are very, very focused in this COVID-nineteen situation on cost and cash flow management, which obviously also includes SG and A. Looking at the various line items, yes, obviously, we are very, very reluctant to hire new employees. Will only do this for essential positions. Basically, we have a hiring freeze.
We are applying short time work in a number of portfolio assets already, such as in Austria, in our NuCom assets. And we are also obviously reviewing and taking action in our U. S. Portfolio, So we are also obviously focused on reduction in other SG and A like travel expense. No one can travel, yes.
And all the video applications which are available are saving our day to day life. Obviously, we are also looking into marketing expense, etcetera, etcetera. So be assured, yes, we are very, very focused on cost. In addition, we are very much focused on optimizing our cash position, yes? We are looking into payment terms.
We are looking into CapEx related projects, whether we should cancel or postpone, So I don't want to give one number. It's a number of measures. And obviously, much will depend on the, let's say, the intensity and duration of, let's say, the COVID-nineteen crisis and accompanying lockdown measures and the potential strength of a recovery, yes. So we have to take it month by month. But rest assured, yes, we are very much focused on this subject.
Okay. Thank you. Fair enough.
Thank you. Our next question comes from Annick Maas from Exane BNP Paribas. Please go ahead.
Good morning. My first question is on NuCom Q2 trends. I think you suggested that Jochen Schweizer and Mietwagen have severe impact in Q2, but what about Flaconi and the dating business or the beauty and the dating business? Are they equally as good as in Q1? Or will we see some weakness there as well, at least from what you see today?
Then secondly, just you mentioned, I think, that joint plus subscribers are up 11. So was just curious to see if that includes those that are participating in the free trial. And if you maybe could give us a conversion rate of the free trial, it would be great. And then again, on Joyn, you suggested that you keep on committed to spending in that business. Is the spending time line, I guess, the same as it would before coronavirus?
Or could we expect maybe less spending this year and then more in the latter years? And maybe one final one, just how do you think about the programming grids going into next year from where we stand today? Are we expecting the sort of old programming grid going back? Or do we still keep some restrictions there? Thank you.
Let me start with the first one, NuCom trends. First of all, for sure, as you stated correctly, especially Silvertur, so Billiger Mietwagen, D. A. As well as Jochen Schweizer, problems in Q2. Totally counter effect also for the beauty and lifestyle business, especially also the matchmaking business because people are really using it.
So I would say and it's difficult to forecast again, but what we could see in April is the trends that we have for Flaconi, for instance, a very good growth rate, I would say, digit growth as well as for Matchmaking. And by the way, also, when you look on competitors in the Matchmaking field. Yesterday, you could also see the announcement of the Meet Group. You also could see that they had a good performance also in Q1. So that's overall a business, especially in the crisis, which is very attractive and works very well.
Joyn, Joyn PLUS, all this kind of stuff. And Joyn, for sure, is very successful in this crisis. Again, have in mind, we are not only a subscription based model. We are most of the most of our business model is based on AVOD. So therefore, for us, subscription is one part of the revenue streams.
And we have to see how the cancellation rate is after the free period finished. And you have seen that we have started with a three month period. But again, for sure, people love the product. You could see that in the statistics. So we will see how this works out.
I think 's much too early to make a trend out of a low number in subscription, which we have currently. But for sure, it's part of the revenue streams for the future, and that's something where we have to work on. Joint funding, good question. For sure, a similar situation like we have in our current business. But here, we are investing because that's our future.
So we don't have huge cutbacks. Automatically, you will have cutbacks if you have content which can't be produced because you ordered it due to the cancellation of productions. And that's perhaps an issue. But overall, cost cutting is not one of the major issues in Germany, which we have because here, as well as digital and smart, we want to grow. And again, also, that's a number perhaps which you also have to have in mind when TV cash outs are going down, digital and smart, in April, and that's what I at least know, are also were also good and positive and with growth.
So you can see that our business model overall works. But again, nobody knows how May, June and the outer months will work. But currently, we are pretty happy with the initiatives which we have taken on Program Grid. Ralf, perhaps you start to answer it.
Yes, Anik. I mean, as you know, we are very cost focused, in particular, in this situation. And how we deal with the programming grid, and your question is probably also related to associated costs, yes, will be a function of where we are, yes, later this year. So yes, should the situation have completely normalized, yes, then we should probably see normal levels in program spend. Should the situation not have normalized, then obviously, we will continue our cautious path.
But it's way too premature to provide any figure, any number, yes? Let's deal with Q2, yes, and the outer year, and then we will cross the bridge when we get to 2021.
Okay. Thank you very much. Thank you. We will now take our next question from Lisa Yang from Goldman Sachs. Please go ahead.
Good morning. Hope everyone is well. Have a
few questions, please. Firstly, would it be possible to get a trend in April for digital advertising? You gave TV down 40%, but what was digital? And if we get can get any color on the developments within NuCom, that would be great as well. The second question is regarding to your probing costs going down $50,000,000 year on year.
Is that a P and
L or cashing part?
Or should we expect any major difference between the two? The third one is on the portfolio review. I mean, you said earlier you want to be investment grade and be below 2.5x, but you're already at 2.7x. And obviously, you have the mid acquisitions and EBITDAs like to go down. So should we expect to see any potential measures of asset sale like before the end of the year to maybe get closer to your target leverage?
And the last question, just wondering if you can elaborate on the Board's decision not to appoint a CEO. That's a bit unusual, but keen to hear your thoughts. So
let me start with the last question. Why am I not CEO? Why I'm a Chairman? The situation is that we really wanted to make clear that we work as a team. And as a Chairman, for sure, I take the responsibility for strategy, for NuCom, for Red Arrow Studios and so on and so on.
But at the end of the day, it gives the company a clear focus on that this is a different approach than perhaps always in the past. And we live it, and you can feel it when you talk to our people, that we really want to make sure, and I personally want to make sure that this is not a one man show. It's more or less a team approach. And that also is in my title, and that's the reason why I've taken this title. So let's start with the first point here on the list, trend in April.
As I already said, we have for digital growth in April, approximately 10%. But again, this is not a forecast for the rest of the year because we have to see how this will develop. NuCom, similar situation overall because we have well performing companies in NuCom. And on the other side, we also have some of them which are not doing as well. It's, again, also a low double single digit growth on the top line for April.
So you can see how robust our business model is. But all this is not as relevant as our TV cash adds because our profitability is driven by that. So therefore, even if everything else is performing good, at the end, the most relevant factor for us is the TV cash add development. What we are not, as I already said, in a fire sale mode. That's the reason why, really, we have to see how we come through the crisis.
Then we will further look on our portfolio. And based on that, we will make our decision which companies, which part of the company really pays into our future and which really helps us. And again, we have a synergistic approach, NuCom, Studio71 as well as Red Arrow Studios. And we want to drive synergies because we believe that this is the value of our company, especially synergies with our strong and our focused Entertainment business, and that's the basis for our decision. And again, we will wait up to the point when the clouds are away.
We know how corona will develop, and we will make our decisions, and we will see. So I'm not under pressure because Ralf and team have done a great job in the past to have a covenant free debt portfolio. And Ralf also presented in his part of the presentation our current debt positioning. So therefore, we are not in a hurry to do something pretty fast. So we have the time.
So we don't need the government to help us here or something like you have heard from perhaps other companies. So we are well positioned. So overall, I feel very, very comfortable that we can take the time to make the right decision, then we will do it.
Harv, programming costs. Okay. With respect to how do €50,000,000 of programming costs translate or reduction in programming costs translate into cash? You can assume that this highly translates into cash, This is what we can say.
We'll now take our next question from Catherine O'Neill from Citi.
Hello. Thank you. I just wanted to come back on the Meet acquisition. Clearly, I think it looks like you're still committed. And I just wondered if you could provide any details of whether there's a break clause or how that would work if you decided not to pursue that?
Secondly, on content production, are you able to talk about the trends in April and how we should think about the sort of phasing of growth across the year given production has stopped for a period? And are you seeing a resumption of production? And then finally, on the bond 2021 bond, I apologize if you've already discussed it, I might have missed it. I just wondered what you're thinking in terms of refinancing or repaying that bond.
So media acquisition, there is no break clause in it by their and we are very happy that this is not the case because we believe that's a good acquisition. As I said, look on the numbers, which they provided yesterday. We have to see how antitrust shareholder approval in The Meet Group happened, and then perhaps we can close in the second half of the year, which we already announced before. Content production, that's for sure more difficult based on the situation for the sales, because based on the situation that they are for sure, everything stopped pretty soon and especially our U. S.
Business. So there, we have a decline in sales. But again, here also more important for us is how we get out of it and how fast we get out of it. And that's something which we don't know currently.
With respect to your refinancing question, how do we deal with the 2021 notes? I mean, as far as we model the situation, we can repay the notes out of existing resources, yes? However, we will obviously opportunistically also screen the market refinancing opportunities, which can either lie in the German Schuldschein market or also in the senior bond market, yes, but no decisions made as of yet.
Also to add to Ralf, due to our cash position, we are not in a hurry here because this is opportunistic, totally right, Ralf, because that's at the end of the day, if you look on our liquidity situation, if you look our current performance, what we all do to save cash, so we feel comfortable.
Okay. Sorry, I just wanted to come
back on production. I know you said you don't know yet how the resumption will look, but are you seeing any signs of any production starting up? I'd heard that perhaps in Germany, it was that was the case, but is that something you're seeing or not?
You have to decide between two things, with scripted and unscripted productions. And for sure, and that's the advantage of our portfolio currently if you watch German TV because we have a lot of unscripted productions. But at the end of the day, you have to make some or somehow, in short period, a decision, what you want to produce up to what time. And therefore, we hope, especially for the German part, since yesterday, the opening has started, that all the trends which we could see in April perhaps will look different in May. That's the reason why we are a little bit cautious in going on further how these things will develop.
So let's wait and see how this all works. Austria, very important for us. Germany, very important for us in our portfolio. I think both countries has done this crisis very well. Big compliment to Angela Merkel, big compliment, especially also to Markus Zuerder, who leads us here in Bavaria because that's very well done.
And therefore, at the end of the day, we feel optimistic, but we don't know. So we will see how this will develop.
Okay. Thank you.
Thank you. So we will now go to Conor O'Shea from Kepler Cheuvreux.
Yes. Thank you. Good morning, everybody. A few questions from my side as well. First question, just on the operating leverage drop through that you expect in the second quarter for the Entertainment business.
I mean, you obviously gave helpfully gave the breakdown of costs in the presentation, but that was pre some of the exceptional cost cutting measures. I think some of your European peers in the French market, for example, have set themselves a target of absorbing about half the decline in revenues in the second quarter through cost cutting measures or avoidance of direct costs despite expecting a decline in advertising revenues of 50%. Is that a number that you think that you could achieve on your side? Second question just on NuCom, margins were weaker in the first quarter despite the limited impact from COVID and only on really the smaller activities within the portfolio. Can you give us a sense of what we could expect in terms of the underlying margins full year, notwithstanding the uncertainties on COVID?
And then the third question, just on the cash. I mean, I appreciate you answered in terms of the cash impact from the lower programming costs. But can you give us a sense of what we could expect cash versus P and L programming costs at GAAP full year? And also, what the situation means for your working capital? Are there any strains there?
Or conversely, is it easier because there are lower number of in house production projects? Thank you.
Richard, let me start with your first question regarding operating leverage Q2 in Entertainment. I mean, what you should expect is before any Connor, sorry, before any measures in terms of program, yes, spent, there will be very high drop through, yes? I mean, Entertainment business is, to a largest extent, a fixed cost business, yes? And hence, revenues, yes, have a high impact on profitability, yes, if they decline. This you experienced also in the past, yes?
But obviously, as I said, in particular, in the Entertainment business, we are very much focused on cost management, cash flow management. But as I said, much will depend on the intensity of the COVID-nineteen situation and the lockdown measures and the potential or the strength of a recovery, yes? The margins in EUCOM are weaker in Q1 despite limited impact of corona. I mean, look, I think we elaborated in our presentation that the high margin Billiger Midwaggen business was already affected. Yes?
And we will see more severe impacts on, let's say, the leisure and experience related businesses also in Q2, yes? But again, much will again depend on how does the situation evolve. And I don't want to put out a margin target for now, yes, for the full because it's pretty impossible to predict how the overall economic situation will develop. Yes, please understand, yes? And the cash impact from lower programming costs, I think I already answered one of your predecessors' questions.
If we reduce by €50,000,000 this will have a high positive cash impact, yes. And we are also optimizing, obviously, working capital as much as we can, yes? We are improving payment terms, etcetera, etcetera. So overall, I would say that we have the cost and cash flow situation pretty much under control. But to provide you with any, let's say, financial targets in this type of situation would not be wise, yes?
Okay. Ralph, you expected directionally the gap between cash programming costs and P and L programming costs to be lower full year 2020 than we've seen in 2019 and previous years. Would that be fair?
Yes, could be the case, yes.
Okay. Many thanks.
Thank you. We will now take our next question from Omar Sheep from Morgan Stanley.
Good morning, everyone. Just a couple for me, if I So first, Rainer, I wonder if you could give us a sense of your planning assumptions for how advertising may potentially recover from the second quarter. Do you currently expect that second quarter will be the trough and that you'll start to see a gradual improvement from Q3 onwards? Obviously, don't have much visibility, but just based on your conversations with advertisers so far in relation to, you know, deferrals versus cancellations. That's the first question.
And then secondly, Rainer, I was wondering whether you could just share your views on the dividend. You've obviously sort of confirmed the commitment to 50% payout, obviously, by the end of this year, you're gonna have significantly higher leverage than your your target. And obviously, notwithstanding the potential to pay that down with an IPO of some of the NuCom assets potentially next year, what is your sort of conceptual view on whether you think you have the right level of distribution to shareholders in the
form of dividends at this point?
Thank you very much.
So let me start with the first one. You have a lot of discussions, currency, especially with the agencies about the market. And a similar situation like we have, and also have seen some of the agency also announcing that in the market that they don't know. And the situation is what we have we done. We consequently worked on our cost.
We have scenarios in place. I also have a scenario, for instance, that corona will last six months plus two months recovery as well as three months and everything else. So we manage cost consequent on the worst case scenario. That's what we do. And then we react to every positive momentum in that situation.
What you haven't are cancellations. So what you have are postponements. So we are talking to agencies currently, which tell us, can we already book or prepare for our customers or get spaces in the second half of the year, especially for sure in the fourth quarter because a lot of people are expecting that then everybody gets out of the crisis, and then there will be perhaps a push. If this is the truth or not, we have to see because nobody knows currently. But we have because due to the construction of the contract, you get a discount if you take a certain volume.
So you don't have that situation that you have a lot of cancellations. So it's more or less postponements, which we have to address, which is totally in line with our communication currently that we also don't know how this will develop. I can't say more currently. Dividend payout, we hope, and that's our assumption, that our EBITDA and our profitability gets better again, so that we also should be then able to pay out a dividend. And that's also our assumption, so we will see.
But we are strongly committed, and I only can repeat it. And we had a long discussion in house, what we can do, what we can't do. And because dividend payment is, for sure, something which our shareholders really appreciate. And for sure, was a tough discussion. And it has also to do with the situation as being an SE where we didn't have the allowance like others to postpone the general shareholder meeting for the second half of the year.
So that's the reason why we also stick to the June 10. And based on that, it's conservative, right, and consequent to say, in this situation, by not knowing how it will go on further, that we save this money for this year and announce consequently in the market that we will pay a dividend for next year again.
Okay. That's very clear, Veroni. Thanks very much.
And we will now take our next question from Richard Ehry from UBS. Please go ahead.
Yes, many thanks for the call. A number of my questions have already been asked. But just I just wanted to try and get some clarity around the cost out program. Obviously, you've outlined where you're going to take cost out, but you haven't really given any sort of numbers beyond the €50,000,000 on the programming side. I can appreciate that that's subject to obviously how the coronavirus impacts the business and obviously how deep and long that goes in terms of actually how you think about your cost program exercise.
But I don't know whether you can give us a range of numbers of whether that's like a 50,000,000 to €100,000,000 potential cost out savings to offset the revenue decline or not. That would be the first question.
Richard, this is Ralph answering your question. I mean, what you can assume is that we will be doing more than just the €50,000,000 on programming, but the quantum of which will clearly depend on the scenario in which we will operate, yes? So we have implemented all necessary measures on the for the respective SG and A line items. As I already said, yes, we virtually have a hiring freeze. We are applying this short term work measure, which is provided by both the German and Austrian governments.
We are pushing out CapEx relevant projects, etcetera, etcetera. Don't deliberately do not want to provide a range because we will have to deal with the situation as the situation develops. However, yes, certainly, it will be more than just the 50,000,000 on program.
Okay. Okay. That's clear. Just secondly, going back to a number of other questions that people have asked, is that I mean, are we just to get your comments correct, when you said that May trading was probably similar to what April trading was at minus 40% and then you're indicating digital was still double digit plus 10%, and obviously, that's carried on until May. Are we assuming that May is the worst month?
Or are we assuming that May is similar to April? Or is it till too soon because of late booking?
It is 100% too soon because at the end of the day, you know how our lead time is. And and, you know, we now have to see how the on on top bookings look like. We started, like always, in this time, the month lower than the 40%, which we reached at the end of the day in April. And now day every day, we get on top bookings now in, and we have to see how this will end up in May. And again, for me, April, May are very relevant, but more important is June, July, August, September, and especially what we see in the fourth quarter.
Have in mind our seasonality. Our seasonality, and that's what we have in mind always, the last quarter is the most relevant one. And perhaps this year, depending how long this crisis goes, the last quarter could be the most relevant one during the last two to three to four years based on two effects. First is, it's always very strong in the Christmas season. And second, lots of people postponed their investments for second half.
So therefore, what we are trying currently with our programs and that's and I have to repeat and to say thank you to a lot of people in house because all the people who worked here did a great job in March in the second half and a super great job in April because that was the best performance we ever had on our program. And that's, at the end, the basis for success going on further. And we have seen and we have shown in our statistic how successful TV is as a medium. And that's clearly, for us, the basis also for this consequent business model to focus on entertainment and to consequently take advantage of all of that. So program first, we will see how the advertisers will behave.
And based on that, hopefully, then we know it better in three months. And again, yesterday, in Germany, we started to announce that the treatments are getting better for the people. People can go out again, and now we have to see how Germans will take it and how the behavior in consuming and so on will change. And based on that, we perhaps we can see trends. Hopefully, we're not getting a second wave.
But as we did in the past, Germany, Austria, very disciplined people, very disciplined countries, well managed. So therefore, I'm optimistic that the decision was done right, and we will know and see that in the next four to six weeks.
And
our next question comes from Patrick Schmidt from Warburg Research.
Yes. Good morning, gentlemen. Thanks. Just one last question left for me. If we step aside from the current crisis for a moment, could you maybe elaborate a little bit on your measures in terms of entertainment sales approach, maybe with the leave of Michaela Todd, some changes might have happened there.
And you also kind of restructured your entertainment a little bit. Could you maybe elaborate on that a little bit, maybe not pointing out to the current crisis, which obviously is a bit difficult, I guess, but more generally spoken?
Wolfgang Link, who is well known in the industry, has taken over the role in our Board, which shows how strong and how important entertainment is. And also for the sales part, with Mikaela going out, we hopefully will have we are well positioned with the people which we have. We have a lot of people around who are doing a great job. And you will get further announcements in the future how we will position also in the sales part. But again, we are well positioned with Wolfgang in the responsible role.
We have Thomas Wagner, who is one of the sales guys in our industry, well known, very strong. And he managed us on the sales top line very well through the crisis. He did in the past, he will do in the future. So I can't say more currently. But that's clearly faster positioning.
So we what kind of things we are working on? We are working more consequent and very strict on digital and smart. We I also announced that seven paths to our registration wall is an important factor. So we are pushing that a lot currently in the crisis because consumption of our websites is very strong. So therefore, registration, getting data from our customer is important.
That underlines our focus on digital. And also, as I said before, Joyn, an important factor for advertising, but also our own all platforms overall as well as NuCom. All these digital pieces are hopefully shown in the past, shows again how important that is for us. And that's clearly the focus where we are on. Addressable TV, I shouldn't forget.
But again, that's more difficult currently in the crisis because we need the sales forces also on the street. And that's all perhaps not working out in a corona crisis, but we want to get stronger out of this crisis. And that I also have shown in my part a statistic, and that's also the message to the advertisers currently. And we do that, for instance, with our portfolio. When you have so many people at home watching TV, for sure, you can create great brands and getting stronger due to advertising.
That's what we do with our new Com assets. That's what we do with all the things which make sense because that's also for us an opportunity to make our company stronger going on further. And you can see the success. I already mentioned Flaconi. We have forgotten to mention WinStar and some others who are doing very well in the crisis and hopefully will do also afterwards.
Perfect. And maybe could you elaborate a little bit more on maybe what went wrong in the past, especially 2019, where you kind of underperformed your closest peer RTL? And I think it was not only due to the audience share, were there a different approach to agency in terms of providing discounts, etcetera? Maybe you were too aggressive in the past with this respect? Or what could you comment on that maybe?
Honestly, I doubt that we underperformed due to the fact at the end of the day that we haven't seen the disclosure for the relevant markets in a comparable way. I would say, statistically, when you look on the numbers which we have provided and put it together, means digital and smart as well as entertainment, how they announce their numbers in TV cash ads altogether, then we, for sure, we are pretty similar to their performance in the relevant markets.
Government sorry, go ahead.
Sorry. And you're, let's say, fine with your current relationship and strategy with agency and your direct advertising partners, etcetera?
Yes, we are.
Okay, perfect. Thank you.
Okay. Ladies and gentlemen, this was the last question for today's call. As always, my colleagues in the Investor Relations team and myself will be available for follow-up questions. Thank you. Goodbye, and stay safe.
That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.