Earnings Call: H2 2016

Mar 15, 2017

Ladies and gentlemen, good morning or good afternoon. Welcome to the Dufry's Full Year twenty sixteen Results Presentation. I'm Sherry, the Chorus Call operator. I would like to remind you that all participants will be in listen only mode and the conference is being recorded. After the presentation, there will be a Q and A session. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Julian Diaz, CEO of Dufry. You may now be joined to the conference room. Thank you. Okay. Good afternoon. Welcome to this full year results presentation once more in Zurich. Thank you for participating here in the room. These are Andreas Schneider and Julian Diaz calling and participating in the call from Zurich. We are going to go through the presentation in the same way than previous time. There is a presentation that was disclosed this morning on our website. Please go to the Page five of this presentation. One year ago when we were here, we were talking about 2017, obviously, with all the uncertainties, with many events that happened during the last quarter of twenty fifteen, during many months with many question marks. And we were talking about the 2016 goals for the company. We were commenting about acceleration of organic growth. This has been, over the past eighteen months, a request and a question that was repeated many times by investors, by analysts. We were talking about how to improve the EBITDA after the, obviously, acquisitions and how to really deliver what was expected in the integration with order to free and Nuance, increase the free cash flow. And finally, we were ahead of time, but thinking how to extend important contracts of the company that for us were critical, and we obviously tried to renegotiate ahead of obviously anything else. Merovoort, Zurich, Sao Paulo and Cumbos, Humay, Marrakesh and many others have been commented on during the last twelve months. And in the bottom side of Page five, what we have is what happened. Finally, we have reached level of growth in organic growth during the last quarter, very similar to the one that we have had over the past years, 5.6%. And finally, 2016 was a year with positive organic growth, plus 1%. I am going to comment on the different details during the presentation. I don't want to extend at this stage. The second one is EBITDA reached million, 29% above last year. Free cash flow increased by 43%, the highest in the history of the company, CHF484 million. Net debt reduced by $2.00 €5,000,000 reaching €3,700,000,000 obviously, compared with the previous year reduced by 200,000,000 The integration of World Duty Free was finally complete. We were expecting EUR 105,000,000 synergies. And what we can comment on now is that the final amount of synergies identified has been €125,000,000 The remaining part will be implemented along 2017. And this contract, as I mentioned before, we're obviously representing 80,000 square meters of commercial space. I comment on that by year end December 2016, total number of square meters we are operating from the commercial point of view is 425,000, representing €1,200,000,000 of sales. We also finalized the program for refurbishment in the shops for accelerating the organic growth, and we complete 30,000 square meters of commercial space. All these events and all these results cannot be separated of the business model. I have been very consistent over the past year repeating the same thing. Our profitable growth strategy and the business model should remain intact. And I think this information is confirming what I am telling. Situations like what happened during the first half of twenty sixteen, we were subject to many events, many times repeated. Currency volatility, economic and social unrest in many countries worldwide have been a good example about what I am talking about. The business model is resilient. The risk diversification strategy is still valid and the focus for driving more growth that we are using the three pillars: acquisitions, organic growth and obviously new concessions included included there are still valid. In terms of information with more detail, if we move to Page six, what we have here is just the highlights of the full year results. Then the detail will be explained by Andreas. TURNOVA reached €7,800,000,000 As I said, point six organic growth during the last quarter, plus 1,000,000,000 in full year gross profit margin improvement of 40 basis points confirmation of the synergies, new synergies already fully implemented and starting implementing impacting the P and L in 2016 with around CHF 14,000,000 synergies generated from World Duty Free. Free cash flow, again, CHF $484,000,000. And net debt reduction already commented on, but I want to remind one thing. One of the questions that I hear more and more often is how could you accelerate in Dufry the organic growth if you want to reduce the leverage and you want to reduce impact of net debt. The answer is here, is we have been able to accelerate organic growth and in parallel, we have been able to reduce the net debt and the cash generation. The weighted efficiencies are obviously represented there. And the €125,000,000 is something that has not been announced to the market and I am at this stage of the process in the position to confirm that the total synergies due to working to this acquisition is 125,000,000 If we move for the people participating in the call to Page seven, I think I will try to separate the first semester to the third quarter and the fourth quarter. The challenging first semester in 2016 with a strong currency devaluation in key emerging markets for us, Russia, Brazil, Argentina and even China, not mentioned it, but obviously was also minus 10% compared with the mature currencies. And economic crisis in Brazil and Russia. Socio economical events impacting our operation in Turkey, the number of Russians in Antalya dropped by 97% and the drop in number of passengers in many Russian airports and also in Antalya, around 47%. So at that time, that the situation during the first semester was a bit challenging. But again, due to the risk diversification strategy, we also had a very positive performance in Spain, UK and North America, balancing the negative results mentioned before. And again, it is important that the diversification strategy has a mean, and this is the meaning. Our company's performance in the 2016 was a challenge. Sure. During the second quarter, a strong acceleration of organic growth in Q3 due to the continued good performance in Spain and U. S. And the significant increase in The UK after the Brexit announcement. Good recovery in Brazil and higher impact of poor performance in Turkey due to the strong seasonality of the business. I think at that time during the summer, we were expecting a recovery in Turkey, but Turkey was not recovered. The situation didn't normalize until later on. Finally, in Q4, the initiatives launched to drive organic growth impacted positively in the company worldwide. In addition, very strong performance in Brazil and North America and the recovery of our Turkish business also in the low season. We were, at that time, obviously expecting the recovery during the summer, but the recovery happened during the last quarter. It was the low season. The impact in the performance of the company was very low. But we have seen the recovery in Turkey, in Alcalia. As a consequence, organic growth reached plus 5.6% in Q4 and plus 1% in full year. Regarding our trading update and divisions performed better in Q4 than in the previous three quarters, all the divisions. Division one, Southern Europe and Africa, turnover in 2016 reached €1,700,000,000 compared with €1,200,000,000 in 2015. Organic growth full year was minus 2,500,000,000 and plus 1.6 in Q4, impacted by the seasonality of Turkey during the summer. Italy, Spain and Portugal had a very good year with single digit growth. Turkey, due to the events mentioned before, dropped sales close to 50%. And other countries, as Greece and African operations held up relatively well with a small decline of flat sales compared with previous year. Division two, UK, Central And Eastern Europe turnover reached €2,100,000,000 compared with €1,400,000,000 one year ago. Organic growth grew by 3.98.7% increase in organic growth during the last quarter. Very good performance in UK, high single digit growth in the year and double digit growth in Q4. Serbia and Finland, single digit positive performance in the year and double digit in the quarter. Sweden and Switzerland were both almost flat. Russia and other related countries remained negative, but with positive acceleration in the second part of the year, especially in number of passengers. Division three, Asia, Middle East and Australia. Tunnel reached €770,000,000 compared with €630,000,000 one year ago. Organic growth positive in the year, plus 0.4% compared with, obviously, the previous quarter is a significant improvement and 1.5% in the quarter. Excellent double digit growth in Korea, Indonesia, Sri Lanka and India. Single digit growth in Cambodia and Georgia. Operations as Hong Kong, Macau and Australia, with negative performance due to the impact of the Chinese consumers and the renovation of our shops in Australia that at that time were started, obviously, with a lot of impact in the sales. Division for Latin America to no longer reach EUR 1,500,000,000.0 in 2016 versus EUR 1,400,000,000.0 one year ago. Organic growth in the division was minus 4.1% full year and plus 3.7% Main impact, Brazil and Argentina. Good performance in Uruguay, Ecuador, Chile, Peru, Mexico, Dominican Republic and Jamaica with high single digit growth or double digit growth. Brazil reached minus 6% full year with high double digit growth in Q3 and Q4. And finally, Division five North America, total reached €1,600,000,000 compared with 1,300,000,000.0 in 2015. Organic growth reached 4.5% positive in full year with plus 7.2% in the quarter. Strong performance in Hudson duty paid business and duty free in Canada, mitigated by negative performance in duty free U. S. Due to the stronger U. S. Dollar. All the positive trends commented during Q4 twenty sixteen have been confirmed in January and February despite the calendar effect in February. All divisions performing well with positive recovery in Africa, Turkey, Greece and Italy in Division I. Acceleration of growth in UK, Sweden and Finland, an excellent recovery in Russia and other Eastern countries with double digit positive growth in January and February in Division II. Similar performance in Division three, Middle East and Australia, good performance in China, Macau, South Korea, Indonesia, Cambodia, Jordan and Kuwait and still negative performance in Hong Kong. In Division four, Latin America, very good acceleration of growth with double digit growth in Brazil, Uruguay, Ecuador, Chile, Peru and Dominican Republic. All the other operations with similar performance compared with Q4. And Division V, North America, very good double digit positive growth in U. S. And Canada duty free and single digit positive growth in our duty paid business in The U. S. This is, in my view, obviously, we have 64 countries. It's a very short time and the explanation can be extended, but we have a very good picture about what happened and what is going to happen or what is happening now in January and February. Let's move to Page eight. I have already commented on that. I think the most positive thing is the acceleration of growth in Central And Eastern Europe, 8.7% in the last quarter. The acceleration of growth in North America, 7.2% and in Latin America, 3.7%. Still, Asia, Middle East and Southern Europe and Africa remains a bit weak, but still, obviously, I can say, is positive. If we move to Page nine, I comment on that. Last year, we have 80,000 square meters of commercial space on total of 425,000 of extended and signed, three forty shops and approximately €1,200,000,000 in total sales of the company. The concessions renewed were at similar terms than the concessions before the renewals. The average duration of the concession portfolio is eight years. I always repeat the same thing. The quality of the concession portfolio is one of the most important assets we have. Based in the rent we pay, 27.2% in the P and L. The duration is above eight years. And the diversification, we are in 64 countries with hundreds of concessions. And I think there is not a similar case in the travel retail. The concession portfolio is probably one of the strongest assets that we can sell to the market. In terms of the shops opened, Page 10. We have opened 42,000 square meters of growth retail space in 2016. As I said, offerings represent close in gross terms, 10% of the total retail space. As we are going to see in a minute, later on, pipeline opportunity is very healthy. When we comment on the organic growth acceleration, we also comment on renovations and refurbishments. We have renovated last year 30,000 square meters of commercial space in the different locations that are listed in Page 10. I don't think that I should explain anything else because you know the place you have the places there. If we move to Page 11, regarding the new space, we have already signed 22,000 square meters of commercial space. This 22,000 square meters of commercial space, as is in the chart, will be opened, most of them, 2017 and a small part in 2018. The locations are, I think, well known. We have won the tender in Bogota in Colombia, first time that we stepped in Colombia, one of the few countries that we have been able to step in Cairo in the new terminal, new cruise with NCL, new shop in Macau, Mozambique, new country also, Haddroad Hotel in Las Vegas, Terminal 4 in Cancun, Tampa Traction and there is a long list of concessions that we have already signed on top obviously of the pipeline opportunities. The pipeline opportunities are represented there, 38,000 square meters of commercial space. Most of this space is negotiated or the process to be negotiated in Asia, Middle East with 14,000 square meters and in North America with 11,000 square meters. If we move to Page 12, just for commenting one of the most important KPIs regarding the organic growth is very interesting. International passenger forecast in 2017 is plus 7.1%. In January and February, we had plus 9% global basis. I am not talking about Dufry's sake, but I am talking about global basis. In 2018, the forecast is 6.2% and in 2018, 5.8. I think the regions are clear. Here, Asia Pacific, Middle East and Latin America. Obviously, we are represented well in all these regions, except in Asia. If we move to Page 13, I have repeated many times the strategy and Dufry segmentation. But in terms of Dufry division, I think the diversification strategy is also represented here. 27% of the business is U. K, Central And Eastern Europe is Division two. 22% of the business is Southern Europe and Africa and so on and so on. I think it's relevant to say that still in Asia and Middle East, we have only 10% of the market. We are not represented properly. And as I have repeated in the past, our intention is to multiply this 10% by two, obviously, in order to balance the business by during the next five years. In terms of two key categories, the most important, Fashion and Cosmetics, 32% Confessionary Foot, 17% luxury products 12%, wine and spirits 15%. That's confirming again the strategy of the company regarding the product diversification and the product mix. In Page 14, Dufry still is an airport retail company. I confirm that 91% of the total sales this year are generated in airport retail, but we have a significant good diversification in border shops, railway stations and cruise lines and shipyards. During the next five years, the company has the intention to expand these categories, especially the cruise lines and seaports and the border shops. And specifically, in the regions where we are not well represented from the airport retail point of view, for example, in Asia. Dufry by sector, duty free 60%, duty paid 40%. I think gradually the company is going to this fifty-fifty balance between the two businesses that we commented on many times. Let's move to Page 15, implementation of synergies. I already commented on that, euros 125,000,000. I don't think that I should comment on anything else. Maybe that in the P and L 2016, we had an impact in terms of savings in the cost structure of €49,000,000 and in terms of gross profit margin, positive impact of €14,000,000 This is due to both duty free acquisition. If we move to Page 16, I think in January 2015, we were here and I remember that we comment on the efficiency plan, 50,000,000 target efficiency plan. And one of the arguments we did at that time is that, obviously, after several years of acquiring companies, it was the time to really reorganize the way we worked and the opportunity to really be more efficient. At the time that we acquired World Duty Free, I have to say we cannot do everything at the same time. And we differentiate between synergies and efficiencies. We differentiate because, obviously, there are two different ways of generating both things. In the World Duty Free case, what we said is €105,000,000 is the target in terms of synergies. And somebody one analyst asked me, why are you talking about now synergies and not efficiencies? And I said because I think the efficiency is something that we need to implement in a different way, and we need now to concentrate in delivering to the market what we have promised at the time that we acquired the company. And we put on hold the efficiency program, whatever was the name. Now I think after the integration of Watertifree, is the right time to come back to the original idea, how to make the things better, how to continue, obviously, with the growth of the company, with efficiency of the company. And one of the most important initiatives, probably not one of the most important initiative is the business operating model implementation. I think this is, in my view, and is the intention of the company that when this business model or business operating model will be implemented, the company will be more efficient, more focusing the customer and also will generate more profitability. What are the targets here? Number one is drive growth. Drive growth at what level? The same level that we have had over the past years. From a organic point of view, and I am going to repeat it many times during this presentation, we want to set up this 5%, 6%, 7%, obviously, on the situations that organic growth represented over the past thirteen years. Then drive efficiencies. It's already there. We are we have the intention to contribute to the P and L with 50 basis points at the EBITDA level when the planned business operating model will be fully implemented. That will be around 2017 and 2018. The third one is to protect the commercial model. I think what we are going to really deliver to the market is very unique in terms of commercial approach. The business model has a big component that is how to connect with the customers, and one of them is the shop and the new generation store that will be open, and I am going to comment on that later on, is one of the main drivers. Ensure the financial model, I am going to say every time the same thing. We are very disciplined from the financial point of view. And we don't do crazy things intentionally. This company has the intention to continue with the same level of discipline in terms of financial approach. Then it's increased competitiveness in the market, this obvious, with one single intention, to better serve the customers and fulfill their new challenging expectation. That's the whole thing about. Then how this business operating model is going to be developed. Number one is aligning the operating processes and procedures in the companies to change organizations in each company, introducing the benefit of this process of integration with Nuance and World Duty Free with all the lessons that we have learned from them too. And finally, adapt the new ways of collaboration between the headquarters, the divisions and the countries. This business operating model is a reality. It's not a project. It has been already tested in Mexico. We are in the last steps of the project in Mexico and will be fully implemented in in 13 locations along 13 group of countries around 2017 and fully implemented in 2018. Then the second important project, and I think it's very also relevant, is digitalization. I think we are talking everybody is talking about digitalization. And to understand what digitalization is about is every time more difficult because we don't want to be a digital company, right? What we want to be is a company focusing the customer and behaving with the maximum efficient possible. And digitalization is just a tool for doing that. Our intention is that this technology will facilitate the increase in penetration in spend per ticket and as a consequence, in spend per passenger. This is a process that is already started, too. I think the historical performance in Travel Retail is not. It's penetration is very low. Only 15%, 16% of the total people going through a airport buy something. The opportunity is unbelievable. We have been for many years trying to connect with the customers before they travel, and it was impossible. I remember that we did things with the taxi driver, with bus stations, with many things. And it's impossible because since the moment you are there until the moment you travel, it's a long way and long time normally. With digitalization, with digital tools, we are going to explain how, this is something that is very important and very useful. Travel Retail is very unique. Everybody is talking about online and high street. Both are very competitive and both will probably have an input in the business we have. But we have very special conditions. Number one is we have captive audience. We have to invest millions in attracting the people to the shops. The customers are there. The difficulty here is how to define really the assortment, how to adapt the assortment to the new passenger profile, how to connect them when they are in the journey of traveling. This is the real challenge. And we have a very unique shopping environment. Information that we have done in research is 47% of the total customers in terms of people that buy something normally are based in inputs buy. 47% of the total people buy by inputs, in gifting, price perception, promotions, type of assortment, sharing with others and novelties. And we, Dufry Travel Retail Companies and Dufry is one, has all these things. The product we sell, if you go through the list, I cannot go through the details, but all these things are there. 53 of the passengers are planned. They go there with an intention. And the intention is based in price perception, gifted, assortment, indulgence, myself, sharing with others. It's the same thing. We have the opportunity to drive more value and operational growth through this, obviously, type of customers. Growing this channel for the suppliers is also very attractive because we have a very good window display. What are we going to do? I think the opportunities are there, but we need to really deliver and deliver in the short term, not deliver in the five years plan. Number one that we need to do is continue developing our core categories. I think core categories are very resilient to many other types of retail activities. Core categories, tobacco, SPD, partnered with Meliare are there since the beginning of the travel retail. Number two is continuing to develop input purchase for sure. Number three is protect our channel, if perceived as value saving channel. Number four is to develop exclusive assortment for travel retail. Number five is secure level of footfall in the travel retail shops, more walk through shops, better traffic flow within the shops and better location. And number six is accelerate digitalization for increasing the penetration rate of spend per ticket and as a consequence, the spend per passenger. And this is leading me to the second program, Page 18. This is how driving customer experience difficult. And Dufry has obviously a model. This is the model that we are implementing now. Number one, we are using digitalization for understanding better our customers. We have referred, Mr. Dufry, many other analysis of information. We have more information than any other company in this business. We collect information in all the shops. We are operating in three fifty locations, 2,200 shops. Training the staff, and I think there are two examples there. One is providing their latest technology, that is the iPath and how to deal with the customers with the airport and really generate more sales through the information the airport could provide. And the second one is this program that we have started with Disney in order to train the personnel in a really interactive and focused in the customer service. The third one is omnichannel, digital experience. We have three elements today. Dufry Rest, loyal program, probably you heard about it. We are going to expand it globally very soon. It's an application that will facilitate your identification and your connection with the company, preorder service, this is merchandise, and social media activities. And finally, new experiences through digital innovation. The most relevant one is the new generation store. I think in 2017, you are going to see the new generation stores in several locations starting in Heathrow Terminal 3, Cancun, Melville. The opportunity is unbelievable. This shop is going to be a new type of approach to the customers from now on. Dufry is going to lead the process. The intention is always the same. It's how to connect with the customer, how to provide the customer the service they are expecting, how to increase the sales per ticket. The way and the approach in terms of communication is here. I cannot go through all the details, but you have here Home, Airport Depart in Page 19, in flight, airport arrivals and post arrival. What you have here is all the channels that we have we are in the process to implement. On the left side, with channels and the locations where we are contacting with the people. It's the first time in the history of travel retail that we are able to do that. And the second, obviously, aim is that all the stakeholders are aligned. Stakeholders starting with the travel agencies, air carriers, operators, airport landlords and also the suppliers. And this is, again, an exercise of approaching the business from the moment the customer is at home to the moment the customer is back in their journeys. And we can do it for one single reason. We can do it because we are the largest, and we are everywhere. And we can connect onboard. We can connect at the airport. We can connect at home. There are no companies today in the travel retail that can do something like that. Strategic priorities for 2017 in Page 20. Now I want to continue with organic growth. Organic growth is going to be, again, in 2017, a main purpose of the company. The high penetration in the shops, part of the organic growth, including the next generation store, the connection with the customers and new customer profiles, the digitalization. We are going to continue with the refurbishment. We are going to comment in a minute. Then we have new projects and expansions. I mentioned we have today under negotiation 38,000 square meters of commercial space. And the target in terms of refurbishment this year is 50,000 square meters. Drive profitability through and efficiency through the business operating model implementation, obviously, use the central functions in terms of the best practice to implement the business operating model and efficiencies along the company. And the deleveraging that obviously is a key liability for 2017, will lead in the future also to acquisitions because this is a question that sometimes I heard quite often. Is this company still thinking about to implement acquisition? The answer is yes, but not now. We need, obviously, to do the things properly. And what the intention we have is to continue with the organic growth and acquisitions growth at the due time. The due time is when the leverage will reach a level that will be acceptable in terms of what we are expecting from the company, as you know, between 2.53 net EBITDA leverage. In Page 21, strategic priorities again, just with obviously more detail. Organic growth above 5%, and we have signed twenty two thousand square meters, a thirty year pipeline and 30,000 refurbishment. The intention is 5%, 6%, in any case, 5% organic growth 2017. EBITDA in order to reach 13%, 13.5% in middle term, I think three areas that I need to remind here. Number one is the volume decrease synergies, they are already there, will be fully impacting the P and L in 2017. The second one is the contribution from the business operating model efficiency, 7.5 percentage point of EBITDA margin. And the third one is the recovery of the business in operations like Brazil, Russia and Turkey. That obviously, at the time we did this announcement, were in a different mood than today. What I can see is the companies in these countries are performing well today so far. And finally, the cash generation. Cash generation, the medium term target is below 3%. I would say I will always say between 2.53% net debt to EBITDA. And this target remains unchanged. That's all from my side. Andreas, do you want to continue? Sure. So good morning and good afternoon, everyone. I'm going to present the financial part So if we move to Page 23, there we have the different growth components. Julian already commented most of them, so I'm not going to repeat it. Just one comment which I'm going to repeat now on my presentation is, the first quarter was the first quarter where we actually had no consolidation impact. So as you may know, the World Duty Free acquisition annualized in August 2017. So the Q4 is sorry, August 2016, so the Q4 is the first quarter where we can have a direct comparable. Now if I look at the currencies, starting with the emerging market currencies, what we do see is like the 2016 was a lot more benign in terms of exchange rates than the first half. So especially the Brazilian real and the Russian ruble, they have stabilized over the last few quarters, and they even slightly strengthened from their lows. In terms of the Argentinian peso, there we had a big devaluation in December 2015. So there again, in Q4 twenty sixteen, we had the full year impact of that. Going forward from Q1 twenty seventeen onwards, what we do see is the Argentinian peso is a lot more stable compared to 2016. Generally, when we look at the emerging market currencies, we see a lot less volatility at the moment. So this makes our life a bit easier, if I can say it that way. Then if we go to our main currencies, the British pound, euro and U. S. Dollar. So on the full year, we had a negative translation effect of minus 0.6%. This was mainly driven by the British pound devaluation starting in the second half of twenty sixteen. Now if you go through the Q4, there, you had two effects: the British pound devaluation, which increased a bit compared to Q3 and also the euro Swiss francs was a tad weaker than in previous quarters. For that, in the fourth quarter, we had minus 3.3 versus minus 0.16% in the third quarter. Now if I look forward into 2017, we will continue to have a negative FX impact because of the British pound up to June 2017. Just to reiterate what we always say at this point is we are largely naturally hedged. So when we talk about FX impact, this is mere translation impact, but no transaction risk. Then if I move to Page 26, the P and L overview. So again, we already discussed top line. If I then start directly with the gross margin, so this improved 40 basis points year on year, mainly driven by synergies. On the concession field, on a full year basis, this increased as a percentage over sales because of the consolidation of World Duty Free. But if you compare the full year to the nine months, you will see that this remains stable at 27.2%. Then personnel and other expenses, they improved by 1.2 percentage points year on year, and this was the same percentage also in the fourth quarter comparing Q4 twenty sixteen to Q4 twenty fifteen. Overall, EBITDA was 0.1 percentage points higher than last year. Then below EBITDA, we have the depreciation. This is in line with last year at 2.1%. Amortization, this is higher as an overall amount because, again, of the full year consolidation of World GT3. If you look at it on a quarterly basis, you will see that we had a charge of $95,000,000 approximately for the quarter. This is fully in line with previous quarters, and that is also the number you should assume going forward for 2017 on a quarterly basis for this line. Then the next line we have here is the linearization. And just to remind everyone, the linearization is related to our Spanish concession contract. Here, we had a charge of $75,000,000 as we communicated. For 2017, for the full year, the respective amount will $59,000,000 Again, to mention, we have a very, very strong seasonality in that respective line. So the biggest charge that you will see in linearization will be Q1 twenty seventeen. And the charge for Q1 will be $42,000,000 so for everyone to be clear on that one. Other operational results ended up with $42,000,000 There, the restructuring cost, the additional charge that we put in 2016 was $6,000,000 Else, the biggest element was basically project costs, start up costs, which amounted to close to $20,000,000 Then on the financial results, we had $215,000,000 of expenses. As we mentioned on our last call, and we are going to discuss that later on, we repaid the U. S. Dollar bond, and that generated one off charges in total of 19,600,000.0 all of which were charged in the fourth quarter. Of those, 13,500,000.0 were cash and those were charged to the financial result. Just to remind, the annual interest expense of that bond was $27,000,000 so we're going to save that. So in principle, you can reduce at least the financial results by that amount. Then on the income taxes, the income tax charge was $11,000,000 This would translate into a tax rate of about 20%. As you know, there's many discussions in many countries on corporate tax rates. So I think the forecast is really, really difficult to make. I don't dare to do it. What I can say, though, is we internally continue to use a tax rate of 20% to 25%. That's the best guess that we have, but take that with a pinch of salt. Then moving on, noncontrolling interests were $43,000,000 The biggest minorities we have are in The U. S. The U. S. Performed very well. And as such, I think that is also reflected in that line. And then to conclude, the cash earnings, so where we add back acquisition related amortization, amounts to $323,000,000 so $140,000,000 higher compared to last year. Now if we go to Page 27. So there we have basically a focus just on the fourth quarter. As I said, you can directly compare it because there's no acquisition effect anymore. And I think what these two charts do show in a very, very nice way is all the work, the integration work that we have done. So you do see the 40 basis points that we have on the gross margin, and you see the 160 basis points in total on the EBITDA margin in Q4. So I think it does reflect all the work we have done to generate the synergies. On the synergies side already mentioned by Julian, so $60,000,000 already baked in, in 2016. There's another $60,000,000 which we expect to come in 2017. On the cash EPS, moving to Page 28. The cash EPS has become a lot more seasonal ever since we acquired World Duty Free, especially this linearization effect that I was mentioning beforehand adds to that. So I think it's we need to look at it on a quarter by quarter basis. If you look at the fourth quarter, cash EPS grew by 60%. On a full year basis, it was 50% growth. So you do see again the synergies and the improvements coming through the bottom line. Then on the cash flow statement, Page 29. We had a very strong cash flow generation year on year plus 43%. Also in the cash flow, you do see the seasonality of our business, especially in the working capital, and we're going to see that later on. We will discuss core net working capital and CapEx in a separate slide. But if I look at the other lines here, there's actually no surprises or nothing unusual in the cash flow statement. So I think it suffices to say that we are very cash generative as a business, and we have used the cash to deleverage the company. Then on Page 30, we have the two key metrics for the free cash flow and starting with the core net working capital. On the right hand chart, what you do see very nicely there is that we have been able to lower the core net working capital year on year, starting with 2014 before the acquisitions and now ending up at 5.4%. If you then look at the seasonal pattern, you also see that the improvement that we have shown in Q3, so this about one percentage point improvement year on year, we have the same improvement in Q4. So this improvement on the core net working capital, I think we consider it structural. So we really have made an effort to improve the core net working capital and to generate some cash here. On the CapEx side, we have 3.2% of sorry, CapEx is 3.2% of our turnover. This is bang in line with the 3% to 3.5% guidance that we gave, and it's also fully in line with the $250,000,002 $75,000,000 that we indicated. Going forward, we feel that this 3% to 3.5% range is the right percentage to use. So I think there is no change in that respect. Now if I move to the balance sheet on Page 31. Again, keep repeating myself. It remains substantially unchanged. There is no surprises there. Biggest items are intangible assets, so concession rights and goodwill. On the liability side, it's obviously net debt and equity. Then if we move to Page 32. So what you do see here is that we have reduced net debt by $200,000,000 So I think we deleveraged the company somewhat in 2016. Covenant was three sixty nine versus a threshold of four times. Now going forward, we do have a number of projects in our pipeline in Greece and LatAm, which does require investments in addition of our normal CapEx. Overall, we expect to deploy a bit more than CHF100 million in these projects, and this will happen in the next couple of quarters. Now because typically the next the first quarter and to a certain extent also the second quarter are not very strong in terms of cash generation, we have triggered what we call a permitted ratio increase. This is an existing feature that we have in our bank facilities, and this is designed to give us a short term flexibility for three quarters, so until the 2017 in that context, for small and midsized investment. And the basic idea is basically to have sufficient headroom, which is typically or not typically, which is required by the rating agencies. So this has been executed. Important point here, the permitted ratio increase does not trigger any additional costs, neither one off nor recurring. Then to conclude, as I mentioned earlier, we repaid our USD 500,000,000 bond expiring 2020. We did this repayment in December 2016. This was our most expensive piece of debt with a 5.5% coupon. So the savings until the maturity of the bond will be in excess of $80,000,000 As I said, there has been a one off charge of $19,600,000 and a yearly saving will be $27,000,000 The debt by currency, again, we have mentioned that in previous calls. We try to match the cash flows of our business, so that's why you see an important part of our debt in euros and U. S. Dollars. That is all from the financial part. So I hand back to Julian. Okay. Thank you, Andreas. I think on Page 35, we have what probably is a brief explanation about what we have discussed today. Number one, Dufry in 2017 is going to be focused in driving organic growth. Achieving this above 5% organic growth is one of our targets using the new technologies, using the new spaces that we are negotiating and using the refurbishment of the 50,000 square meters I commented before. The second one is the business operating model should add as significant improvement in terms of efficiency and the way we work, but also in terms of the P and L. And this 50 basis points is a target that will be developed above 2017 and 2018. It's also and I would like to do it with, obviously, with all the details possible, but we are in a presentation from the financial point of view that the new store generation that will be launched in Hydro Terminal 3, Suzurik, Merbun, Cancun, Marit and all, then are in process. It will obviously change the way that travel retail shops are perceived. And finally, continue with the cash generation and deleveraging with the middle long term target of 2.53 leverage net debt EBITDA covenant. That's the presentation so far. And I think it's probably the most interesting part, the Q and A. Thanks for taking my questions. Jan Jan from UBS. The first one would be on the equity free cash flow. I think it was around €200,000,000 for 2016. And I have to admit, significantly below what I have expected, and it was close to €300,000,000 Now it seems the organic growth is becoming more capital intensive with the new projects in Latin America and Greece. Does it also automatically mean that organic growth in 2017 will accelerate versus Q4 twenty sixteen? And also, what should we expect then upon equity free cash flow run rate for twenty seventeen-'eighteen considering net working capital, tax charges and potential prepayments? And this would be the first question. Second question on the EBITDA, can you please share with us what was the incremental synergy and benefit in Q4 from Wirtu D3? And the last question would be on the concession fees. What do you expect in terms of step up, including potential prepayments Okay. Look, I think on the equity free cash flow, I have tried to highlight that, but I think it's really, really important here, is that if you compare Q3 with Q4, and I think that's what you're doing, we do have a very, very strong seasonality nowadays on the net working capital. So I think what is always a bit dangerous here is like to do the short term comparison because this may be misleading. If you look at the overall model, I think we should be able to significantly increase the equity free cash flow because actually as the synergies come through and as they're going to be reflected, this should be increasing almost frank for frank, if I can say that. So if we can continue to grow profitably as we do now, you should see an increase which is quite significant. So what I would want to avoid is to tell you that $200,000,000 is the right number to plug in your model. It should be a lot higher than that. And one point that I also wanted to make, which you alluded to, I disagree with the notion that organic growth should be more cash intensive. There are some specific projects that I mentioned, but that doesn't necessarily mean that the CapEx or the overall investment that we need to do in projects should be higher going forward. So I feel very, very comfortable with a model that we have done in the past or that we have had in the past will also be applicable to the future. Okay. From my side, the organic growth, obviously, is conditioned to many events that are also not controlled by us. I think to say that we'll be above 5% is the more realistic figure. We have only two months. If you ask me the organic growth within the first two months is more than 5%, the answer is yes. But I cannot at this stage of the process to tell that it's going to be higher than that. My statement is in 2017, the target is to be above 5%. Regarding the impact of the synergies in the last quarter, I don't have the information here, but I think it's information we can share. It's not an issue. If you contact our Investor Relations department, we can discuss it. I don't remember exactly how much. And the last question was? I think that was the last question. Concession fees. Concession, step It was on concession fees. Is that up. Including potential prepayments for 2017 and 'eighteen? Increasing concession fees. Increasing concession fees in 2017, this is the question. I think we'll be quite stable. I don't think that in 2017, we are going to see a lot in terms of increasing of concession fees. Instead, obviously, we win a significant concession and with the higher with the like for like comparable, I don't think so. Say hi. Sorry. Yes, just a moment because I think Jon was here with Thanks, Julian. Jon Cox, Kepler Cheuvreux. Congratulations on a very interesting set of figures, particularly that organic sales growth in Q4. I wonder if I can just push you a little bit more. Actually, we don't have to plug into our models necessarily, but what was organic sales growth in the first couple of months of the year? Because the way you're talking, it seems to be closer to high single digit rather than 5% at this point. Second question, you talked about gross retail space expansion being about 10% of your existing space currently. Just wondering, are you going to be withdrawing from any space at all? Are there any contracts that you're not satisfied with? Or could you give us a net figure basically for this year? And then just to come back on that €100,000,000 expenditure you mentioned, Andreas, is this just because of the timing? Or is it and it's not included in your guidance of 3% to three point Or actually, is it included in your 3% to 3.5% and the reason it's all about timing? It's just you're doing it in the first part of the year and you don't have sufficient funds to do it. Well, I think this is a question that probably I already answered. But yes, in January and February, the company has grown more than 7% organically, okay? But it's January and February. And I don't want to lead to any conclusion. The conclusion for me is above 5%, okay? Number two is regarding the space. The target for this year is exactly the same, 10% of the total space, more or less, as new space added to the concession portfolio. And we already got 22,000. And the third one is the early next Yes, exactly. So look, the reason why I've done it is mainly a timing issue. So if you look at the overall CapEx number, I feel comfortable with the 3,000,000 and 3,500,000.0 But timing wise, we will have to deploy that cash into in the first and second quarter. And we just wanted to make sure that we are comfortable, if you want, on the covenant side. Thanks. Felix Ramos from Credit Suisse. Two questions from my side. First, you mentioned that you renewed quite a lot of new contracts, and you even mentioned that at similar terms. So I was wondering why is that? The normal structure, you would expect that you have to pay more to the airports. So what are you seeing in these negotiations? Do we have hit some ceiling in terms of what your competitors are willing to pay? That will be the first question. The second question will be on the gross margin expansion. I just wanted to understand a bit better why does it take a bit longer to expand the gross margin versus realizing operating cost synergies. So you're only achieved €40,000,000 on a gross profit margin. That why does that take longer than the other Yes. Okay. Regarding the concession fees, that is not a secret. There is no fear that we are smarter than anybody else. No, we have commercial propositions that offer the authorities, whoever airport authorities or landlords, the opportunity to increase their income with, obviously, the spend per passenger. The negotiation process is quite often where you go there with a proposal where you visualize in five years' time the income for the landlord, let's say, that road. And the way to manage to maintain this is specifically that, is value created for the landlord. And I think this is not an issue that there is a top line or is a threshold that now is lower than in the past. I don't think that this is the case in the negotiation process. In this negotiation process, was one on one negotiation, where we offer them from the commercial and financial point of view propositions that are increasing their revenues per passenger in the long term. Most of the contracts that were here were for ten years, extended for ten years. Obviously, it's a long term proposition. Number two is regarding the gross profit margin. Obviously, it's very difficult that the day one in a cost structure, you can go there, save and see this moment on, we save it. You can calculate it, and it's very obvious. In the gross profit margin, you have different alternatives. You have first of all, you have inventory acquired with the oil price. And then obviously, you need to sell the inventory and at the same time, the new inventory. Then you have negotiation processes that are based in volumes. And then you need to wait until the volume is performing. And there is not a single way. It's not a mathematic issue whether you go there and the first day is there. It's a combination of negotiations where you are leaded to increase the gross profit margin 40 basis points, but it's a consequence of different negotiation processes. For the reason, it takes more time, especially because the old inventory has to be sold. Another question here in Yes. I have a group of questions with regard to synergies. First of all, just to get it right, numbers you mentioned that are reflected in the 16 accounts, these are actual numbers. It's not analyzed or something like that. Not analyzed, right? Correct. So if I calculate then the gap to even to the increased synergy potential to the 01/2025, see that accounts for roughly $70.80 basis points, whatever the sales expectation is. That means more is required to get above 13%. And here the question, do we have to see further leverage, I mean, line growth and the BMO impact to come through in order to get the margin above the 13% as you that's a bit of a difference to what you commented in the past, Yes. Obviously, you have three components of this difference. One component is synergies. This is something that's already there. This is confirmed and will be implemented along 2017. The second component is, obviously, the efficiencies generated through business operating model implementation, these 50 basis points that are already calculated. And the third one is at the time I comment on the 13.5 EBITDA or point 5% EBITDA margin target, it was based in the situation we had. What has changed? The Russians changed the Russians in Russia the Russians in Turkey has changed in Brazil. What we have seen so far is a recovery of these operations. And these operations were good in terms of the blended, in terms of the mix. And I think what we need now is this business come back. I am sure it's coming back because it's a reality. It's there. Brazil is growing double digit. Russia is growing double digit now. The operation in Antalya is also recovering compared obviously with low season. We need to see the high season. I don't think that it will be a problem to reach 13%, 13.5% EBITDA margin if these conditions are met. Okay. Now second question is the the very strong growth that we've seen in Spanish airports, is there any chance that the linearization charge is going to be reduced or that we're going to see a different pattern on that line? So far, no. So I think we would need to have another extra strong growth extra year of very, very strong growth in order to get closer to that. But if we just do the basic planning that we have up to date, the minimum guarantee will stay or linearization will stay as it is today. Okay. And a third one again to the BMO. How should we look at this? Is it primarily a cost? I mean, is it tackling OpEx rather than the gross margin? Or what is And the second, attached to that on the time line, could could you put in, I don't know, when you say by end of twenty eighteen, you want to have the 50 basis points on EBITDA margin, say half of that in 2017 and half of that in 2018 and then the full 50 basis points in 2018? Or how we see Yes. The point here is the main reason for doing the business operating model is not the cost saving. But as a consequence of the business operating model, there are cost saving because, obviously, the company will have a different structure and a different process and procedures and more it will be more efficient. This is one thing. As a consequence, from the financial point of view, the 50 basis points is something that we have calculated based on the change of the structure and the change of WeWork. When will it be reflected in the P and L? We will try to do it as much obviously as fast as possible in 2017. But yes, due to the calendar of implementing the different events, it will be the second part of 2018. This is the most realistic way of looking. What is I'm sorry, I forgot the other part of the question. No, think that was Thank the you. Just one question. Currently, the Hong Kong tender is available. I think there are two different categories. Could you tell us a little bit your position in this one? I think in Hong Kong, there were two different packages. We have only participated in the perfume and cosmetic package. We have not participated in the package of tobacco and spirits. The reason to participate in the package is when we analyzed the project, it was under the parameters from the financial and commercial point of view that we were satisfied if we could be awarded with, obviously, the restrictions we have. The restrictions we have are the discipline, the financial discipline I said. I think 60% of the awards or the points or whatever is the name they use is due to commercial activities and 40% is due to the financial offer. As a consequence, I got the impression that we have a chance because, obviously, we think that we have been able to offer the authorities there an opportunity to really drive more sales, drive more income per passenger. That is, in fact, what they are looking for. Then how the competition and how the different participants will behave, we cannot control that. But I can tell you one thing. We want to win in Hong Kong is the only thing I can say. You. Stefan Touple from Eight Sleep Basel. A completely different question. Could you elaborate on the shop in Heathrow that you shop and the new experience that the consumer is going to have there? Well, the shop is difficult to explain because we don't have a picture, but the reality is that the shop will carry on specific initiatives from the digital point of view and commercial point of view that will change the way that the shops internally are operated today. The shop will be a shop alive that will contact with the customers when they are around in the corridors, obviously, with technology that is based in digital, number one. Why? Because if you identify they are there, you can bring the people inside the shop and at the same time offer them personalized offers. The second thing, the shop will have different departments and different initiatives that will be also dressed up with digital technology. The shop, depending on the time of the day, will input messages in the different languages of the nationalities going through. For example, they will have different departments in terms of products and in terms of services because the software is also delivery service. For example, it's social media areas where you can obviously contact with the social media and also you will be attracted by the famous personalities that are in the country. You will have the opportunity to discuss and go inside the shop and discuss with them about the shop and about many other things. For example, the shop will have new products. And I mentioned here, one of the most important things for the company is to develop a specific product for travel retail that cannot be acquired in any other places. And I repeat in many presentations the same thing. We have developed with a Swiss company, Lindt, a couple of flavors, chocolate flavors. One of them is Scacciatella and Guasatte Mendo success because the only way to buy this product was in Dufry. Now there is another there are 10 or 15 projects. One of them is with Diageo. They are going to produce a specific whiskey that will be only available in Dufry's shops. That is the way that the shop will contribute. It's not only the format. It's not only the works. It's also the way that will be operated. Thank you. Is that up? Yes. Just a quick question on South Korea and what's happening there with China sort of banning travel groups. Do you start to see any slowdown in your business there? Because I think you're about 3%, 4% of group sales is in South Korea currently. Not yet. In fact, the operation is performing better than even during the last quarter twenty sixteen. We have not seen anything yet. But the number of customers attracted to this specific location in terms of groups is very low. And then just on the sort of deleveraging M and A sort of dividend question, the first part would be M and A targets in Asia. Just want to get what are you looking at? Is it sort of smaller players potentially like bolt on deals maybe over the next couple of years? Or is there thoughts of a big bang? There is a big China player, I think, Sunrise. Is that something you'd be looking at? And the second point, just on the deleveraging and the commitment to maybe paying a dividend. What are your thoughts currently depending on how this year goes? Will you be in a position maybe to pay a dividend on 2017 results if you deleverage as much as maybe you could do based on what your organic sales growth is currently? Thank you. I think with the current financial structure, the company is not in the position to do big acquisitions. This is obviously a remark that I have done many times. The company has the intention to continue exploring opportunities based in acquisitions that are middle and small sized that can be assimilated or acquired with the current financial structure. At the same time, and probably in order of events, the dividend is before these acquisitions, even the small ones, the Board of Directors is considering that in 2018, as a consequence of 2017 results, a dividend could be a good way of returning capital to the shareholders. How and how much is obviously a different question. We are very early in the year, but I think it's a very active initiative within the Board in order to confirm to the next general assembly, obviously, not the next one, next, that the company will be in a position to pay a dividend. What are the conditions here? Obviously, one of them is the performance of the business and the generation of cash. And the second thing is the leverage of the company. What we have seen is that we are deleveraging as we expect, obviously, independently of the events that happen in Turkey and all these places could be better. But we are in the process of deleveraging at the level that we confirm the Board the possibility to if they decided to go ahead with the dividend. I think 2017, if everything is normal, the Board will be in the position to decide it. Thank you. Thanks for taking the follow-up question. And first one would be on Greece with Fraport and privatizing a couple of airports. Where do you stand here in terms of negotiations? What can be the impact on the profitability? Second question, making the EBITDA bridge with the synergies, with organic growth you're targeting, is consensus EBITDA of €1,050,000,000 looking reasonable to you for 2017? This question is about Greece. The other one is a bit more difficult. We have a very long contract sorry, we have a very long license, duty free exclusive in Greece, okay? The license is what it is. We can sell duty free products in all the regional airports. On top of that, we have a very good relationship with Fraport. They are for landlords in many locations, starting in Peru, continuing Bulgaria, St. Petersburg. And we are creating a possibility to create more value in the airport, and I say yes. And we are in the middle of a negotiation where we have identified, we call it quick wins, in order to accelerate extra growth in the locations they are going to renovate. Because as you know, one of the most difficult things we have in Greece in the regional airports is shop locations, shop layouts and especially traffic flow. The shops normally are in the First Floor. If you want to buy something, you have to go there and looking for the shop. They are not going through there. There are many things. And I think with Tracport, this is something that they already know. It's a great, obviously, opportunity to develop a better business in this region of airports, and we are very confident that we will be able to really deliver an extra value to Fraport. On the second part is EBITDA bridge and the possibility. We don't give guidance regarding EBITDA. And I am not going to change this strategy in the future. I think what we try is to provide you with information in order that you may build your assumptions based on the information, but anything else is very difficult. Thank you very much. Any Any other questions in the room? If not, we go to the calls. Thank you very much. No, sorry. We can continue with the calls. Yes. Questions from the audience participating through the company's call. The next question is from Andrew Pentel, Duty Free Magazine. Please go ahead. Hello there and thanks for taking my question. Just wanted to elaborate a little bit more on the new generation store concept, the new generation concept. I know one of the other people asked about it. Understand at the moment, the defined locations are Heathrow, Zurich and Melbourne. But I also understand there's going to be one in Asia. Can you just offer any light on that? And also just perhaps provide a little bit more information in terms of how it's going to elevate the shopping experience, how brands are going to get more exposure and a little bit more on some of the digital components and maybe like the sense of place elements? Okay. Melbourne is what we have identified in Asia, And I think this is already announced, Asia Australia. For us, it's Asia because it's the same division. And it's in the process to be built. In fact, we are quite advantaged in terms of the construction and the renovation. The second part of the question? What's how it's going to be the experience? Yes. I already commented on the new generation store. I think it's from the commercial point of view, a significant advance compared with the shops we see today in Travel Retail because the shop is alive. The shop is a shop that in terms of interaction with the customers will create another extra value for increasing the penetration and the spend per ticket. The reality is that the experience that we have, let's say, collated over the past years in terms of retail activities in travel retail with all these companies that we have acquired with the different ways of doing things in Nuance and Quality Free have contributed also to increase, first of all, the commercial performance and secondly, in my view, the novelty and the approach to the new construction. What I say is a shop that will communicate with the customers through digital screens, but this is something that is very obvious. But at the same time, the most difficult thing is the content. What is the content that these screens should communicate to the customers? And we have a significant project, led by our Chief Operating Officer, Jose Antonio Reyes, with the intention to develop the contents in all these shops because the digital seats, there are no secrets. Digital screens are everywhere. The point is what to communicate. And this is obviously one of the most important things. The second important thing is the new departments and new areas that the shop will carry on. The question coming from the travel retail, I think it's better that we don't comment on anything specific because, obviously, this is also a know how. The third thing is regarding how to attract the people inside shop. I commented on the famous organization and eBicon technologies for really attracting the people inside the shop and they take the people when they are in the airport. There are many areas where this shop will contribute an extra value to the travel retailer. What is the value proposition of travel retailer? And historically, we have seen one, it's less half group savings. Is value We have been for many, many years talking about if it's 20% cheaper or 30% cheaper or 50% cheaper. Now the concept should be different. The concept is what is the value proposition to the customer. And we need to be and elaborate in parallel with the customer development. By the year 2020, onethree of the total workforce population will be millennials. Millennials that are not reading newspapers and not watching the TV and not wearing standard watches many other things. I can obviously tell many things because we have resource statistics for the legal travel. One important thing, 96% of the time, they are in a airport, they are connected to Internet. We need to understand how to connect with them. And part of the whole strategy from the digitalization point of view is exactly that. Next question is from Jaafar Mestari, JPMorgan. Hi, good afternoon everyone. I've got three questions, please. The first one is just about this €100,000,000 of investments that you're going to be making in Q1 and Q2 in LATAM and Greece. Could you maybe just clarify again whether this EUR 100,000,000 is included in the CapEx guidance for the year? So for the year, if I take consensus revenue, are we looking at CapEx of around EUR $260,000,000 and then EUR 100,000,000 or a total EUR260 million, but with early phasing in Q1, Q2? And then my two other questions are on U. S. Duty paid. I think you mentioned single digit growth in your current trading comments, which is one of the slightly less spectacular growth rates this year. Some beverage players and food players have been tackling retail and convenience. People like HMS Host have made acquisitions there. They're talking more and more about Hudson and then Paradis like competitors. Has this segment of convenience in The U. S. Become more competitive? And finally, on organic growth, what do you think it would take for your like for like revenue to completely match the growth in passengers that we're seeing? It sounds like even in your January, February trends, you're talking about passengers doing plus nine, you're doing plus seven. Is the Asia underweight the main delta here? So if I start with the first one. So to answer your question, so let's say the 3%, 3.5% of CapEx for 2017 should remain unchanged. So they shouldn't be higher in a way. So it's really about the cash out that we will see in the first two quarters of this €100,000,000 Okay. Regarding The U. S. Duty phase, what I can say is that, obviously, we are running the most important, largest and more efficient company in travel retail in The U. S. And single digit in this case, single digit high single digit growth is, in my view, a very remarkable performance because the number of passengers that are more impacting this business are the duty paid passengers. And the duty paid passengers are not growing a lot. In terms of competition in The U. S, The U. S. Market is very competitive. It's very competitive. I don't see what is the difference now. Compared with other operators, Hudson has, in my view, the best operational model, and it is reflected not only that, it's reflected in the P and L, it's reflected in the yearly growth and cannot be compared with any other one. Again, I am talking obviously from Dufry's perspective and maybe you think that I am exaggerating, is not. It's growing more than any other competitor. It's having better operational margins than any other competitor. Regarding the like for like, I prefer not to mention the like for like is separated from passengers because I learned a lesson. When the devaluation of the currencies, Brazilian real, Russian ruble, whatever, Mexican peso and many others, I think to convert the growth in passengers to sales depending on the degree of devaluation. And I don't think that today, we are still in a position to separate the degree of this devaluation from the growth of number of passengers. I prefer to say the organic growth, including like for like and expansion, will be above 5% instead to mention the like for like independently. Okay. Thank you very much. And I'm sorry, I just would like to go back on that €100,000,000 investment. So are you saying that there's about EUR $260,000,000 in CapEx? And then separately, it is not CapEx, but there's EUR 100,000,000? Or are you saying that the total spend in CapEx, would include Latam and Greece, would be about $260,000,000 please? So there are two things, okay? So one is the timing of the cash flow, okay? And what I'm saying is like there will be cash out in the next two quarters of $100,000,000 plus, okay? That's what you will see in the cash flow statement. The other question that you put is to say what will be the CapEx number at the end of the year if you look at that percentage of turnover. And there, I'm telling you it's 3% to 3.5%, okay? So that's, in principle, the way I would describe it. The next question is from Charlie Moyarsan, Deutsche Bank. Julian, Andreas, I hope you're well. I just have two quick questions. One is just to clarify your comment on space expansion and the contribution. So you're aiming to grow Space by on a gross basis, 10%. So should we be expecting a significant acceleration in the contribution of revenue growth from new Space versus last year's 0.6%? And then the second question is related to your increase in the synergies from World Duty Free. I wondered if you could just elaborate in a little bit more detail as to what areas specifically you found in addition to your original plan? Or was it that you were just sort of guiding us a little bit on the conservative side? Thank you. Regarding the space or the new space, I think it's obviously difficult to confirm exactly the figure. But if you are considering 10% of gross space added of the total 425,000 that we had at the end of the year, it will be a good approach. Then the difference is or the question is how many square meters are you going to close down this year? This is the stage of the process. We don't forecast a lot, but we don't know. I think in terms of the model, personally, I would put the 10% in terms of contribution of the space and then discount basically in based on historic information percentage. Then regarding the synergies, the €20,000,000 most of these synergies are the extra synergies are going to be generated through the gross profit margin improvement because better deals that we have signed with the suppliers. And also, there is obviously a part that has been identified as cost synergies. But the most important part, I hope, is generated through the gross profit margin and also depends on the volume of sales, as I said before. Great. Thank you very much. Thank you. There are no more questions at this time. Okay. There are more questions here. One more question in the room, please. On in flight, just to clarify this one. I mean you mentioned that on the Slide 19 when it comes about communication with the customer and you call it in flight emotion, can you just exclude or maybe you don't exclude any penetration into that specific segment? I recall that you don't like the business because you don't have control over the working capital management, but maybe now that even at, I don't know, 50,000 feet above, you have connection to the Internet. So what is the statement there? I understand in the same position. I don't like the business when you don't control the cash and you don't control the merchandise. We are not talking about that. Okay? Thanks. Thank you very much. Okay. That's all. Thank you very much for all the participants in the room and in the conference call. And let's see during the first quarter results how the things are going. Thank you. Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.