Earnings Call: H2 2020

Mar 9, 2021

Ladies and gentlemen, welcome to the Dupris Full Year Results 2020 Conference Call and Live Webcast. I am Alice, 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. The presentation will be followed by a Q and A session. The conference must now be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Julian Diaz, CEO of Dufry. Please go ahead, sir. Thank you, operator. Welcome to Dufry's full year results presentation. There are Julian Diaz, Dupri's CEO and Yves Gesta, CFO. 2020 has been Probably the toughest year in the history of Dufry and the travel retail industry. But this has been also an opportunity To reposition our company in a stronger position regarding Profitability, cash conversion, liquidity, strategic setup and growth initiatives. We implement strict measures with a significant personal effort in all levels of the organization. And thanks to the support and commitment of our colleagues across functions, regions, Including landlords, suppliers, management team, members of the Board of Directors and shareholders, we have reached a level of company stronger and more resilient. We feel very proud of the achievements, especially the achievements by your employees And the situation at the end of 2020 significantly overachieved what could have been expected at the beginning of the crisis With soft closures and nearly full standstill of operations. Now we are looking forward with a In today's presentation, we are going to use one Disclosure this morning in our website. And as always, please go to Page number 4 of the presentation. From the left to the right, first of all, is in terms of turnover, we reached 2,500,000,000 Minus 69.8 percent of revenue growth, in light with the turnover scenario provided to the market. We have also confirmed and over the tip in order to adapt the organization to the change of environment A significant cost savings, dollars 1,300,000,000 and also a material part of this will be sustainable in the future, around $400,000,000 In this €1,300,000,000 we can count in minimum annual guarantees €552,000,000 Personal expenses, dollars 527,000,000 and operational expenses, dollars 2.33 Regarding cash, what we commented on to the market, minus 70% scenario, minus 60,000,000 Mostly cash burn in the second half of twenty twenty has been also overachieved. The real scenario has been minus 78% And the cash burn per month during the second half minus EUR46 1,000,000. In 2021, and we are going to comment on that later, We have also projected 2 scenarios, minus 40% and minus 55%. In 2021, we We believe that the minus 40% turnover levels compared with 2019 We will generate equity free cash flow breakeven. Regarding the inflow initiatives, it's very relevant to mention also That along the year, we have been able to successfully execute various financial initiatives. Share placement, dollars 151,000,000 convertible bond, dollars 350,000,000 Bright issue, dollars 820,000,000 convertible notes around $69,000,000 and bank loans in different formats $602,000,000 with a total of 1 point €1,993,000,000 And finally, as a consequence, obviously, of these From movements in terms of cost savings and also in flow finance initiatives, A significant level of liquidity as of December 2020, around 1,900,000,000 Cash $360,500,000 committed credit lines $1,441,000,000 and uncommitted credit lines 100 and Let's move to Page 5 of the presentation. Again, from the left to the side, Resilience of the business despite some introduced restrictions, especially across Europe. However, the openings in other regions, Central and South America and the good performance In Beautypay North America, supported the level of sales with an opening of more than 1300 shops. I think in addition to this reopening, other initiatives also successfully implemented, supported the reorganization of the company. The most Relevant 1, the best listing of Hudson, where 20,000,000 synergies are in the process to be materialized. It's also important to thank our shareholders, the current and all of the historical shareholders supporting us and the new ones, Advent and Alibaba. Alan supported that investing with 11.4% and Alibaba including the mandatory convertible bond around 8.7 This is a very critical shareholder base for, obviously, evolving the company in the future. Continuing with Part of the relationship with Salibaba, we could and in the future, we will explain with more detail, develop 2 different One is the joint venture that considers as a scope the implementation of travel retail, Hey, the duty free and duty free and online and offline in Continental China and in finance. And the second one is the digitalization And the support of Alibaba in the global digitalization. The reorganized group set up now for efficiencies. I think reorganization has been complete and Dufry's profitable reopening and growth and the new regional, especially the regional We'll support the reopening of the sub saloon 2021. This reorganization also considered the removal of divisions, The merger of commercial activities in platforms and in countries, a new group executive committee And the consolidation of finance management in Financial Service Centers. Let's move to Page Sustainability is an important element of Dufry's business strategy aiming sustainable and profitable growth. Our ESG engagement aims to 4 key areas. These are described in this slide. Customer focus, Employee experience and well-being, environment protection and being a trusted partner for all our stakeholders. In a sense, what we want is to have a positive impact within the scope of our stakeholders' ecosystems and beyond. And in Page 6, what we try is to list in each of the focus areas the most important highlights in environmental, With that, we can move to Page number 8. Organic growth evolution already commented, minus 69.8%. On the left side, Gradual and slightly improvement from Q2, Q3 and Q4 organic growth monthly evolution In January February, minus 75%, minus 77%, we have a very resilient company in this level Of sales independently of the closings and initiatives restricting traveling. We have also realized a significant spend Increase in spend per passenger and in spend per ticket. In 2020, spend per passenger increased by 4% and average transaction value, sales per ticket by 8.8 Let's move to Page number 9. Don't forget one thing that the first two and a half months of 2020 were very estimated in terms of business performance, probably The highest January in February that we have ever seen. The situation started to impact from Asia To Europe and then to America gradually. This is also reflected in the full year performance. We are going to comment in full year performance and also in the last quarter, 4th quarter performance. In North America, on the left top side of the slide, This region performed better than other regions due to the higher exposure to domestic traffic. Travel from Central America and Carib to the U. S, we also were also supportive. Minus 65.3 percent full year and minus 69.7 percent in Q4. Our operations in Canada negatively impacted Due to the exposure to international traffic, the performance was driven by Hudson's convenience in Canada. On the right side, Europe and Middle East, minus 73.2%, full year minus 81.3% in Q4. The format obviously was very promising in July August. But for November, the travel restrictions limited the recovery. Central and North Europe, minus 68%, South Europe, minus 78% collapsed due to the international Traffic drop in Spain mainly and Mediterranean and Eastern Europe minus 70%. Continuing with Central and South America, minus 65.8% in the full year, minus 69.5% in Q4, Performed better compared with other regions, driven by traffic front and to the U. S. Cruise business heavily impacted. South America accelerated demand in Q4 with reopenings in Argentina, Brazil, Peru. Better performance in Central and South America, minus 16.8, especially due to the traffic to the U. S. And finally, Asia Pacific, minus 75.4% in full year, minus 83.8% in Q4. International travel highly impacted and our business is well known, is geared to international traffic. Apart first impacted with the closings in Q1 2020. Majority of shops still closed, including Australia, Better development in Macau and China, duty paid since the reopening. Let's now continue on Page 10. We're talking about net sales by region and sector. In general, in line with the performance just discussed in the regional comments. To move share by region shifted slightly to North America, Central and South America. Due to the later impact of the year of The impact of the COVID during the year and also the importance of domestic traffic in the U. S. Domestic travel led the recovery also respected short term in better performance of duty paid And also in the convenience in the U. S. DutyPay gained 500 basis points. Now, DutyPay representing this Mix 44% and Utifi 56%. If we move to Page 11, We are going to comment on net sales and performance by channel. No significant channel shift, boarded shops, downtown and hotel shops, As well as railway stations better performance, an increase to normal share compared with 2019 Due to the collapse of passengers in many regions in April retail. Cruise business most impacted with vessels largely grounded Since Q2, pad ferries are operating again, reopen again. Continued emphasis for the future, we're focusing diversification. The repre obviously is still airport represent 86% of the total sales, cruise lines, seaports 3%, boarded and downtowns 5% and railway stations 6%. If we move now to Page 12, net sales and performance by category. Demand for core categories remain better than other types of product Mix because the recovery has been needed by general shops selling categories like confectionery, fashion and cosmetics, Alcohol and tobacco. There is also a second important remark. Convenience stores selling souvenirs, Food, bottled drinks, electronics, convenient products in general due to the U. S. And other countries with this type of business, We're always in most of the cases in Brasilia. But in any case, it's still passing on cosmetics As is on the left side of this chart represents 31% of the total business, food and confectionery 19% wine and spirits 17% luxury products 11% And tobacco products 12%. If we move now to Page 13, Total number of square meters of commercial space opened by December 2020, 470,000. We continue to open, especially in Q1, new floor space, adding 9,600 square meters of 2% of total retail space, with a diligent CapEx to all. We reduced the spot CapEx by 57%, meaning €139,000,000 below 2019. In close collaboration and also in agreement with landlords. We secured all the newest important contracts also in 2020, Istanbul Sabija Airport, San Petersburg, Zurich and Montego Bay in Jamaica. Also relevant is our 1st Hudson non stop store. There is a picture there with Amazon's. Just walk out technology for convenience Contactless shopping at Dallas, Los Fille, April in the U. S. This is the first one of the shops in collaboration With Amazon, the first results are very promising, but it still is very early. We move to Page 14, The partnership with Alibaba and SDH in China. Announcement of our partnership with Alibaba only happened in October 2020, With first duty free operation started in January 2021 in collaboration with Henal Development Holdings, Involving a successful opening of Moa Moa Moa in Downtown Haiku, Hena. One of the most successful openings I have personally with long queues and products sold out within hours. Shop size, Current subsize is temporary 3,000 square meters. Final size, the setup of full development will be In Q4 2021, Q1 2022 with more than 39,000 square meters of commercial space. The relevance also to mention the online sales channel already implemented with around 25%, 30% of sales Through online in this news show. We are convinced that we can contribute with our expertise to enhance the customer experience and brand positioned as partner of choice. Please allow me now to hand over Yves for presenting the financial summary. Thank you, Julian, and welcome also from my side to today's conference call. Let me please start with some personal remarks before turning to the financial summary. I am convinced that you are not surprised to hear That the 2020 events were completely unexpected. What started as a local disruption became the perfect storm. Julian already talked about the various initiatives we implemented, those reached from taking immediate actions and control costs and cash, To short and mid term financing initiatives, implementing a new organizational setup, engaging with new and long standing shareholders As well as initiating projects for organic growth during and beyond the recovery. This brings me to the second development. I would not have expected at the beginning of 2020. The crisis has resulted in changes, which go way beyond surviving the next month. We fundamentally transformed the whole organization on all levels. In this regard, the crisis allowed us to focus on organizational change, And we took this chance to act fast and decisively. For me, most surprising and at the same time most rewarding Was the dedication, commitment and support within the different teams. Personally, I refer to my colleagues in the Executive Committee Within the finance function, of course, but also the collaboration, cross functional and on a global level. The willingness to work long nights and weekends while not knowing the outcome of your efforts and still acting as a team was incredible. I'm thankful for I've been able to experience this positive energy and teamwork when challenged most. I'm also thankful for our shareholders, Bondholders and analysts, your continued support, interest and the many interactions we had throughout 2020. With this said, let me please turn to our financial performance, starting with the income statement on slide 16. Our income statement reflects the significant cost reductions we achieved throughout 2020. It also contains one off effects caused by the unprecedented level of disruption in our retail operations. Gross profit reached CHF 1,377,000,000 in 2020 with a margin of 53.8%. Let's look at the key drivers for the drop in the gross profit margin. Around 2 60 basis points And margin drop were caused by lower selling prices due to promotions and the relative higher weight of our wholesale business. In addition, the lower level of sales affected the duties and freight ratio by around 30 basis points. Another 3 50 basis points relate to one time inventory write offs from our heavily impacted cruise business And liquidation programs performed during the year 2020. I would like to emphasize that purchasing prices Have not been affected by the pandemic and we expect a normalization of our gross profit margin in line with sales normalization. Lease expenses reflected an income of CHF8 1,000,000 in 2020 and were decreasing due to the lower level of sales and MAC relief. Up to December 31, we were able to close agreements releasing around CHF551 million of lease obligations. Thereof CHF380 million were recognized in the P and L of 2020 as MAC reliefs. The reminder is subject to different IFRS 16 accounting treatments And recognized over time. We continue to be in discussions with our landlords to lease adjustments for 2020 as well as 2021 And have received verbal agreements in several cases, which are now subject to final documentation. Personal expenses decreased by CHF 527,000,000 or 42% compared to 2019. Savings were driven by our efficiency program implemented early on. It included reducing costs on all levels, Making use of government support schemes as well as voluntary salary reductions. Personal expenses Reported in the P and L also includes CHF 73,000,000 for restructuring, which were accrued in 2020. Other expenses decreased by CHF 233 1,000,000 or 42% compared to 2019, Reflecting the initiatives to reduce as much as possible all operating expenses. We also implemented a centralized OpEx management as part of our reorganization. Depreciation, amortization and impairment amounted to CHF 2,842,000,000. The increase relates to impairments because of pandemic, Which affected actual turnover as well as projections. It is important to note that an overall amount of those impairments is related to depreciatable And amortizable assets. The impairments, therefore, only represent the timing shift of amortizations, which would have happened anyway over time. Put it the other way around, the impairments done in 2020 will lead to a significant lower depreciation and amortization charge in the future. Our adjusted operating profit reached negative CHF 1,562,000,000 in 2020. Our financial results, excluding lease interest and foreign exchange rate differences, increased due to one off expenses for the various financing measures in 2020. We closed the year with 0 FX impact. Income tax was positive with CHF131 1,000,000 As most of our operations reported losses. Adjusted net profit attributable to equity holders was minus CHF 1,658,000,000 Moving on to slide 17. Slide 17 illustrates that the drop in turnover of CHF 6,287,000,000 CHF compared to 2019 resulted in a change of equity free cash flow of only CHF 1,411,000,000. The decrease certainly hurts. However, the significantly lower drop throughout reflects our achievement in reducing expenses for leases, Personal and other and managing our cash flow tightly since March 2020. We also reduced CapEx related outflows by CHF139 1,000,000 with an overall CapEx spend of CHF106 1,000,000 in 2020. We put CapEx investments on hold as much as possible, while we adopted our overall approach to CapEx deployment. Therefore, we do not expect a catch up in the short or midterm. Net working capital saw a negative change compared to 2019. I will comment on that on the next slide. Moving on to Slide 18. Changes in working Capital reached minus CHF 314,000,000. Changes in our core working capital was minus CHF 73,000,000. The outflow was caused by the minus 70% in turnover and related decrease in trade payables, which decreased by CHF491,000,000. Our inventories decreased by CHF 390,000,000 due to inventory management and as we placed much lower orders in line with the reopenings. For 2021, we expect a working capital inflow with a full reversal with sales normalization. Moving on to slide number 19. As mentioned on slide 17, our cash flow metrics Proved relatively resilient when you consider the significant drop in sales caused by the pandemic related shop closures. Adjusted operating cash flow reached minus CHF406 1,000,000 and equity free cash flow stood at minus CHF1.27 €7,000,000 in 2020. As a reminder, adjusted operating cash flow can be considered as a good proxy to the former EBITDA. Net lease payments in full year 2020 amounted to CHF 401,800,000. The reduction was mainly driven by the relief received from our landlords on minimum annual guarantees. The graph at the bottom shows the bridge from equity free cash flow of CHF383,000,000 we achieved in 2019 to the equity free cash flow in 2020. In addition to CapEx savings, we benefited from lower taxes and interest paid, While changes in working capital were higher as already discussed before. Moving on to slide number 20, Which shows you an overview of the various financing measures successfully executed in 2020. The objective was to strengthen our capital structure and liquidity position, which we clearly have achieved. To quickly recap, we generated total gross Proceeds of CHF 890,000,000 through a rights issue supported by Advent International and Alibaba Group. Already in April, we secured commitments from our lending banks for around CHF397,000,000, Which allowed us to convert uncommitted into committed credit facilities. We also received access to a total of CHF205 1,000,000 of COVID-nineteen related government backed loans in different jurisdictions. These include now also GBP 50,000,000 from a U. K. Loan granted in December 2020. We placed GBP 350,000,000 in senior bonds Q 2023, which are conditionally convertible into shares with the maturity of May 2023. We also placed 5,000,000 new shares out of the existing authorized capital as well as 500,000 treasury shares And generated gross proceeds of CHF 151,000,000. We entered into an agreement with our bank consortium To waive the existing financial covenants until end of June 2021 and to assign a higher leverage covenant 5 times net debt to adjusted operating cash flow for the September December 2021 testing. Our shareholders agreed to cancel the dividend payment for the full year 2019 to strengthen our liquidity position amidst limited visibility, Especially at the beginning of the health crisis. Moving on to Slide 21. Starting with the net debt evolution on the left side. The measures just mentioned allowed us to strengthen our financial And resulted in a net debt increase of only CHF242 1,000,000 compared to the end of December 2019. As you can see on slide 21, net debt also as of 31st December, 2020 stood at CHF3.3 billion. On the right side, you see our debt maturity profile. We have upcoming maturities in 2021 2022. The €360,000,000 liquidity facility maturing in April this year has a 2x 6 months extension optionality built in. The facility is currently fully undrawn. The $700,000,000 and the $500,000,000 term loan And will mature in November 2022. We are already in initial discussions with our lender banks to start the refinancing process. This process Includes also the review of the financial covenants. We cannot comment more at this stage, but I can confirm that based on what we know today And feedback we have received during the last couple of days weeks, we feel comfortable about the next steps in that regard. Moving on to Slide number 22, which provides the quarterly view for the net debt development through 2020. Changes in net debt is a proxy for cash consumption. However, FX effect on net debt and other non cash items are also included. The aforementioned equity measures strengthened Dufry's balance sheet and improved the net debt position. Q4 saw the inflow of the net proceeds from the rights issue and mandatory convertible notes of overall CHF 880,000,000. In December 2020, we successfully closed the merger with our subsidiary Hudson by acquiring the remaining outstanding shares not already owned by Dufry CHF 275,000,000 plus CHF 4,500,000 in transaction costs. Without this, Dufry net debt position end of 2020 Would have even be below pre crisis level. Moving on to slide 23, which displays quarterly cash Consumption defined as equity free cash flow. Cash consumption during the first half of twenty twenty was mainly attributable to inventory build And payments related to previous quarters. During the rest of the year, cash consumption was significantly reduced with a monthly average cash consumption of only €45,700,000 in the second half of twenty twenty. With this, we overachieved our target of €60,000,000 per month For the second half, cash consumption underlies some seasonality based on sales, but also payment terms and certain one off payments. For the Q4 2020, this was mainly related to interest payments, one off restructuring costs and higher supplier payments. Dufry is well aware of those payments and planned cash flows accordingly. The same thing will happen during 2021, where we will see the highest cash out In the Q1 as part of the normal seasonality. Moving on to slide 24. Tufry's liquidity position at the end of 2020 amounted to CHF1.9 billion, And we expect to be very well positioned with this status. The amount is significantly higher than at the end of 2019, where we had CHF 1 point CHF 5,000,000,000. Dufry is in a significant stronger position today concerning its availability in respect to cash and credit lines. Julian, I hand over to you for the outlook and the conclusion of today's presentation. Thank you, Yves. Please, let's move to Page 26. We have here the global travel passengers recovery forecast. I think a concern on 2021 passengers It still obviously has to be said that visibility is very short. Projects between minus 24 And minus 49% compared with 2019. Different data providers produce different recovery levels from 2022 to 2024. And for the year 2029 So, 2021 compared with 2019, we can see in this column the different projections by institution. What we have seen, and this is a repeated event, following the announcements of governments lifting restrictions, What we expect is a resuming of travel and especially domestic and interregional travel By the end of Q2 and Q3 onwards, the most recent experience is what happened with Specific examples that we had with the UK and other countries showing a surge of bookings and this is happening today. When restrictions are lifted or they are in the process to be lifted. I think if we move to Page 27. What we have here is the different scenarios that I mentioned at the beginning of my presentation. The situation is still with very limited visibility. We cannot provide guidance again because obviously there is not And specific, obviously, support for that. But we are going to approach at the beginning, especially of this year, Again, I'll provide 2 number scenarios and the latest sensitivity analysis on expenses, Cars consumption, we are aligned with estimates from industry and industry associations And apply 2 scenarios, minus for 2021, minus 40% and minus 55%. We have 2 columns. On the left side, it's minus 40% and the other one is minus 55%. Sensitivity on expenses It's also clear here. What we have tried with concession fees is to put the pre IFRS 16 in order to provide And information regarding what is the impact that we expect in terms of concession fees when the drop of Sales is minus 40% and minus 55%. The other two ones, personal expenses and other expenses, as we said and repeated, Basically starting with a EUR 400,000,000 sustainable saving EUR 285,000,000 For personal expenses and EUR 150,000,000 for other expenses. There is still a set of initiatives that we have In order to protect the company in case the situation is not going in this range of performance. In terms of CapEx, we have also projected 2 scenarios, €160,000,000 in minus 40% and €130,000,000 in minus 55%. Regarding the average cash consumption or cash per month consumption, In the first case, in minus 40%, we are expecting that full year 2021, we could reach breakeven due to the savings implemented With 2 different parts. The first half minus €50,000,000 per month, the second part around minus plus €50,000,000 per month. In terms of minus 55%, what we are expecting, especially with the trend today in half year It's minus €60,000,000 per month during the half 1 and slightly negative minus 10% per month during the second part With a total cash consumption per month or cash burn per month of €35,000,000 Through the obviously, both the restrictions and To the savings of this EUR 400,000,000, we expect to recover our cash flow levels based in 2019 But it will depend obviously on the evolution of 2021. We move to Page Number 28, re openings and situation of re openings. Performance improved from obviously from the middle of June, July to middle of August last year, due to the reinitiation of new Due to the reinitization of new restrictions, sales proved resilient on a low but relatively stable between Middle to high 70s compared with 2019, and this has been repeated over the past month. It's independently of The importance of the restrictions initiatives, the company is quite resilient at this level. Sales performance improved in December And January, due to the holidays and some leisure travel, but especially visiting family and friends, As well, obviously, as reopening in areas like Central and South America. February and most important, the trends in February, as you see there, is minus 78%. And there are 2 aspects I would like to really remark. 1 is the demand of travel retail resume fast When the restrictions are lifted. And the second one is performance driven by easing of containment measures It's also gradually improving. And the graph here shows obviously the evolution in general tends If we move to Page 29, we have also Here, the number of shops that we are planning to reopen global network and diversified portfolio, mitigate the fetch of some reclosings With outlook trending toward openings and obviously increasing number of shops and sales capacity, What we are expecting is by the end of March, 60% of the shops that we are operating We will reopen, representing around 65% of sales capacity. In any case, we go step by step. We continue to align opening days and hours, number of staff, subcategories And assorting to passengers evolution and profiles per location. If we move to Page 30, Couple of obviously, size of information that could be useful. Customer insights is It's an integral part of our commercial approach and operations. We do a lot of research and we continue Through about 2020 to assert customer behaviors and preferences to supply Set up and obviously offerings according to the operations. On the left side, I think there are a couple of Remarks that could be very important. This research was done In June 2020 and in January 2021, when you ask the question if the customers We'll engage the same or more with different April activities, 92%, 91%, depending on the one that you choose, Steve is thinking that duty free will be a priority. And regarding the activities that probably they are more afraid of, When you try to obviously discover what are the concerns and what are the most difficult Initiatives that they may think about, there are 2 aspects that I think are relevant and we are using also, of course, in the development of the shops open. 88% is convinced that they need to pay with credit card or mobile payments And 83% stay away from crowded areas. Those are obviously informations that are used in the new operations That we will open during 2021. On the right side, significant to These activities done from security control and until they board, most travelers keep Obviously, thinking in Duty Free as a buying destination, a preferred service compared with other services During the customer journey. And there is not an evidence, and I want to remark that there is no one single evidence that Free WiFi on smartphones affect purchasing behaviors, and we ask this question. Shopping in duty free also in the second part, It's a main service with customers consider to spend more time around the airport. 60% and also 60% of our customers consider that duty free prices are cheaper compared with 2 years ago. I think the perception in the customers traveling so far remains very positive. Finally, we are also gathering insights into product preferences, purchasing motivations or value perception And implemented as a part of the commercial offer for this reopening phase. The elevated of passengers The spend per passenger than Avadash transaction value, just per ticket, gives us the confidence that with the reopening And with the speed of the reopening, we will recover the business as soon as planned. Let's move to Page 31. This is the company plan to maximize in the shortest period starting the value creation And some examples about capital allocation. There are 5 key pillars we would like to present. On the left side, from the left to the right, We are continuing and it's important to remember that main priority still is obviously Disciplined growth approach and cash flow management to control the CapEx, to control the OpEx, to control the personnel expenses remains Main priorities in 2021. And these priorities are aligned with the reopening phases in the different countries. The second one is Proteller Liquidity and Proteller Liquidity not in the general term, Proteller Liquidity with specific initiatives Due to the limited visibility of the recovery. Currently, we don't have a dividend payment, and this will be subject as is of use With a or condition to the renegotiation and depending on the recovery trajectory. As also mentioned by Yves, We have already started the renegotiation process for refinancing in 2021 2022 maturities. If we move to drive growth, what is the meaning of the right growth? I think there are 2 aspects here. 1 is reinventing operations To maximize the value of current portfolios with 3 areas, retail excellence, portfolio optimization And scan new opportunities of collaboration with Salesforce. And the second group is commercial initiatives, but commercial initiatives for accelerating like for like growth. The first one is category strategy and supply chain optimization and the second one is travel retail repositioning in collaboration with brands. What we want is really to be at front of any recovery, understanding what is happening and the changes that are happening in order to accelerate growth when the business will be As you look at the scale on digital, there are 5 projects here that really are relevant in collaboration with Alibaba so far. And they are moving from enhancement of Dufry's IT and digital platforms to continue with driving New in store technology and building the smart shop, boosts digital marketing customer experience and some others. And I think the collaboration going with Alibaba is critical and We'll be a great element in order to really engage with the customers in this event. And finally, and it's very, very important for us, We will continue stressing our sustainability project. We focus in for key stakeholders. The customers, The possibility to impact positively environment protection, employees and to be considered a touch for partnership. Let's move to Page 32. As a conclusion, I would like to repeat one thing that sometimes maybe sounds very often, but it's very relevant. 2020 It has been the most challenging Dufry's and travel retail year in the history. We ended 2020 With a stronger than anticipated position at the beginning of the year and Obviously, especially at the beginning of the crisis due to a series of initiatives, including the $1,300,000,000 fiscal savings, Generating a strong liquidity position by the end of December of EUR 1,900,000,000 supported By current and new shareholders. We also would like to thank banks and bondholders for their support in the process. Dufry changed the organizational setup for creating a more efficient fixed cost $400,000,000 excluding rents are recurring and this will be reflected very quickly as As soon as the business is recovering and the cash or the generation of cash will be recovered too. We will see companies The company is through certain disruptions because the visibility still is very short, while acting in opportunities and evolving For new businesses, we are not at this stage of a process still. What we are looking is good examples of using The capabilities we have in the group for expanding the business. Company plans is very relevant for us, But what the message is Dufry is set up for recovery and the growth Obviously, it will depends on the evolution of the work, it will depend on the evolution of the passengers. Well, we finished with this full year 2020 results. And now we are looking forward to your questions and all that will come as always. Thank you very much. The first question comes from the line of Jorn Iffert with UBS. Please go ahead. Good afternoon, Julian, and good afternoon, Yves. Thanks for taking my Questions. The first one would be, please, on digitalization. I mean, with your cooperation with Alibaba, can you give us 1 or 2 examples What is in your project pipeline here linked to digitalization, which can really drive your revenues over the medium term? 2nd question would be, please, On the gross profit margin, you highlighted there's a higher average ticket spend at the moment in the shop, but you lowered your price points. Do you see the risk that due to the accelerating online retail trends we have seen due to COVID-nineteen, your price points are lower for longer? And the last question would be, please, on your scenarios, which are very helpful. When sales are down 40%, you said for the full year, you had around Equity free cash flow breakeven. I did the quick back on the envelope calculation. Can you help me here? Is there any Cash inflow coming from net working capital or deferred concession payments, which will fall into 2022? Many thanks. Thank you, Jon. If let me answer the first two questions and then I will pass to you. Regarding the digital The project with Alibaba, the scope of the collaboration is already defined. And both teams, Alibaba, hopefully, are developing Several initiatives as follows. The first one is an assessment by Alibaba about what is the digital capabilities that We need to fulfill or we need to complement within the current setup of IT industry. And this is coming from obviously hardware, software Ways of using the technology, this is already one, obviously, is what is the basic starting point for them. We have been developing Digital over the past 4 or 5 years. And the next step that is happening today that was done in any case, but with Alibaba, We have a great support. The second one, I think this is probably the most the second and third one are the most effective in terms of how the business is going to be impacted. In the first case is we want to boost the digital marketing. The digital marketing means is how to use the data For understanding better the passengers evolution and also how to engage with the customers even before they travel. Now this is something that Historically, as you know, we have been we have commented on that in the past. We have been very concerned about because when you travel, You can travel 4 or 5 times per year, but to engage with somebody that is going to travel in 5 months is very difficult because finally you need to be engaged with the customers In the moment that they go through the import or they are planning to travel. This digital moves and basic Basically talking about the information and the data that is collected by both organizations will be very useful Not only for Asian customers, we will be for everybody. For example, is when the customer is going to travel. What are the plans they have in terms of destination? What is the timing they have when they go through the pricing? All these initiatives are dedicated and addressed to increase the spend per passenger. And as a consequence, better explain it. First of all, the penetration rate, the spend per ticket and the spend per passenger. And the second Group of initiatives is how to really step forward in the digitalization of what we identify as Smart shop. Smart shop is a reality. It's not a situation where we are obviously trying To invent something new is using technology how to really attract the passengers inside the shop and how to increase The penetration, for example, this is something that also I think I commented on in some conversations we had is the idea is that the shop Stand alone, we contact with the passengers that tested by the system Holding right application or other applications that we are also using or we want to use in order to forward these specific passengers, Promotions and or discounts or offers based in the database that we have been building over the years. These two areas are very commercial and very specific. How is You're going to impact the company in 2021, and it's very early to say. But I think in terms of what we try is increase the like for like In all the locations where we have been operating for years. Then there are 2 other areas We're probably in 3 areas where we are talking in a second phase. The first one is Digitalization of the supply chain, as you know, we are the global company and we deal with inventories globally. We have 4 distribution centers And the idea is to use the digital technology, especially the use of data for improving the efficiency and the deliveries. This is also impacting this, will also impact the sales Because we are talking about how to reduce as much as possible the out of stock situation in a global company operating global inventories. And then 2 other projects that are still confidential But I prefer to keep it. The second one is gross profit margin. Gross profit margin this year has been impacted for different obvious and non obvious reasons. Let me explain. This drop of 600 basis points, an important part of this 3.5% is inventory liquidation and Oxolixent, For example, Chocolate, for example, Parson and Coimbatore Tobacco with OXXOLLENCE due to the OXXOLLENCE Policy in the country then we need to provide provisions. And this is one off and it's not going to be repeated. The second part is around 3% or 3.1% of total. There are 2 aspects here. 1 is the mix of wholesale Because the retail part dropped significantly, this is impacting around 1.5% of the margin and the wholesale needs. But the other one that is probably the second part that I want to say is the discounts on promotions in 20 20% only represent 1.6% of the total margin, meaning commercial initiatives dedicated to implement Of Drive, sales were 1.6%. There are then small differences with duties and freight, especially freight. This is higher because the lowest level of volumes that we ever had happened in 2020 and the use of Transportation increased percentage due to this inefficiency, but this is also something temporary. Regarding the second part of the question, In 2021, and again, John, we are talking about 2021 with the visibility we have today. The margin will not recover the level of 2019. It will be probably, I don't know, Between 1200 basis points below, depending on the mix of the wholesale, again, because we are now doing more wholesale. But from the commercial point of view, at least they will be between $100,000,000 $200,000,000 depending how the recovery is happening. Well, I cannot confirm anything, but the recovery of the margin is possible because conditions have not changed. And if this is the situation, probably the margin will be recovered in 2022. This is regarding your first two questions. Regarding the third question, Yves? Thank you, Julian. So look, Jorgen, in respect to the 3rd question you had, the cash flow in respect to net working capital, the scenarios we have Provided contain a certain normalization of the net working capital. So yes, that's correct. And then in respect To the question about deferral of concession, no, this is not the case. So we haven't taken into account any deferral of concessions in that regard. It's actually the opposite. So what you see there is the concessions which we plan to pay and we have not taken into account any MAC reliefs for the year 2021, Which go beyond what has already been granted by the landlord. So from that perspective, it's a prudent approach. Thanks a lot. Thank you, Leon. The next question Comes from the line of David Holmes with Bank of America. Please go ahead. Afternoon, guys. Thanks for the call today. Just two questions. On your cash scenarios for the first half of the year, Yves, I think you mentioned you're expecting that to be front loaded in Q1. Can you give us any indication of your expectation of the monthly cash burn In Q1 to start with. And then the second thing that I wanted to ask you was, you mentioned earlier you don't expect To see a medium term catch up in CapEx. So just wondering if you found some efficiencies in the CapEx numbers Going forward, there are 2 questions. Thanks. Look, in respect to the first question, thank you very In respect to the first one, we cannot go as granular as providing monthly or quarterly cash Consumptions, obviously, as you know, if you defer a payment by a couple of days or an inflow happens a couple of days earlier or later, that That has obviously some disruptions on the picture. What I can tell you is that for the first half in the first scenario, the minus 40%, We assume that we have a monthly cash burn of €50,000,000 and for the second scenario, the minus 55% scenario of €60,000,000 in the first half In average per month. Having said that, you can assume that the Q1 Q1, due to the seasonality of the business, The cash burn is higher than in the second half sorry, than in the second quarter. So from that perspective, you will see a higher cash outflow In Q1 2021 and Q2 2021, but that's normal, nothing unusual. Then to the second part, The catch up in CapEx. Look there, if you look back or if you remember that already during 2019, I. E, Before the crisis, I always mentioned that the historical CapEx level of 3% to 3.5% per year in average Does not hold through anymore. And that my assumption is that it is slightly below the 3%, I. E. Between 2.5% and 3%. Now yes, we have obviously optimized a little bit. So you can assume that going forward, the CapEx level will be short of the 3% we have communicated The next question comes from the line of Jabhar Mestari with Exane BNP Paribas. Please go ahead. Hi, good afternoon, everyone. I've got a few questions, if that's okay. Firstly, just coming back on that cash burn for H1. I appreciate The exact quarterly sequence is difficult to estimate. But maybe looking at the type of outflows you're facing in H1, Across your guidance, we're looking at a total €300,000,000 to €360,000,000 outflow For H1, are you able to break this down between what should be ongoing operating cash burn And then separately, the more one off payments in nature like the true ups on the minimal guaranteed rents, for example, that come out Around Q1, if I'm correct. And secondly, yes, please. No, please, sorry. I didn't want to interrupt you. Secondly, still on free cash flow, just big picture. Before COVID, you had a few years in a row where you delivered equity free cash flow between €350,000,000 €400,000,000 Any major changes to the business model, to the assets, To the economics of certain contracts or relationships that we should have in mind that would make this historical performance Not a good indicator of future performance if we assume you return to peak profitability. And just lastly, on the minimum guaranteed, we've seen the public proposals that AENA has made To all its retail partners, if I'm correct, as of February when they presented it, it looks like you had not accepted the proposal yet. So just to clarify what's included in your 2021 guidance with regards to that and what's the range of outcomes, please? Thank you very much for your questions. I will start with the first two ones and then hand over to Julian for the 3rd one. In respect to the cash burn for the first half or the consumption there, so look, all the cash flows we have reflected there are ordinary business. So there is not any specific one offs in that regard. You mentioned the concession fees or the true ups. So look, let me repeat on how that works. So there are concessions where we pay the true up after a quarter. So it's quarterly true ups. In some other ones, it's annual true ups. So there is no significant cash outflow to be assumed for the first half of twenty twenty one in respect To minimum annual guarantees. Also, you need to bear in mind that we have achieved a waiver for around EUR551,000,000 Minimum annual guarantees already for 2020. So from that perspective, there is no significant cash flow included in the EUR 300,000,000 €360,000,000 in respect to MAC reliefs, which goes beyond the normal ordinary business in that sense. In respect to the free cash flow or the equity free cash flow, you mentioned the EUR 350,000,000 to EUR 400,000,000 And what potentially could have changed materially? Yes, indeed, there is obviously the restructuring and reorganization we did in 2020, Which will lead to sustainable savings of around CHF 400,000,000, of which £280,000,000 are coming from personal expenses savings and around £130,000,000 from general expenses savings. So If you take that into account, leaving any tax impact of the higher profitability and some other effects aside, Yes. The performance of the free cash flow we would generate once the business has recovered is significantly higher than pre crisis. Anything major on the negative side? No, there's nothing major on the negative side. Obviously, You can assume that there are certain small pressures on one of the other lines, especially taxes. As I've mentioned before, if we are generating €280,000,000 of personal expense savings and €130,000,000 of general expenses saving, you can assume that profitability of the group is higher, And therefore, there's a certain tax effect on that additional profitability. But beside of that, no, nothing material. Regarding the remarks and especially the question was regarding Spain, in these projections of cash burn It's the normal rent. We have not considered any discounts. Regarding the negotiation process, it's still ongoing. I don't see that this is final at this stage of the process. We can still negotiate basically Due to the situation of the passengers in Spain. Thanks. And just a follow-up on that. It looks like what AENA is Proposing is a formula that applies to every single retailer. So I appreciate it will end up being maybe a bit more I think it's better that I say one thing is, we don't comment on specific concessions. Regarding AENA, The cash flow that you have seen is already considering the full payment. And the reality is that until we know exactly where we land, I cannot comment on that. Okay, fair enough. Thank you. The next question comes from the line of John Cox with Kepler. Please go ahead. Yes. Good afternoon, guys. Thanks for the call. Just a couple of questions. When you talk about this Returning to 2019 equity free cash flow and adjusted EBIT, I'm just wondering what level would the sales need to be to get there? Is it like you now assume that you can get that With a 20% decline in revenue versus 2019 or is it a 10% Decline in that, just to give us an idea of where you're coming from. And are you saying then that basically if you manage to get if we get back to 2020 sorry, 2019 Sales figures in the next few years, because of that €400,000,000 sort of cost block you removed, And in theory, you would be well, it's almost doubling what you were in 2019 at the equity free cash flow. Is that your expectations going forward, whenever that could be, 5, 6 years or whatever it may be? And then just on the you mentioned everything you're doing with the rentals. And obviously, it's more accounting. But what will that do to that Amortization line, which you've had a big chunk there, is coming down. I wonder where you see that line would be In the medium term. And then just a final question, just and maybe I didn't catch it, but talking about these turnover sort of scenarios, you've given us The negative in H1 and looking better in H2, and you've got, say, down 40% and down 55 What are the sort of half year scenarios there? Because if you've given us down €50,000,000 in H1 with minus 40%, I'm guessing You're thinking maybe minus 50% or so in H1 and then minus 30% in H2. Is that the way we should look at it? And then for the other one, Maybe minus 60 in H1 and then minus 40 in H2. Is that your thinking on that? Thanks very much. Thank you very much for your question. So with respect to the equity free cash flow and when we reach again a similar level done in 2019 With the cost savings we have now implemented, a good proxy is probably around 1 third, 30 percent of drop in sales to reach a similar level. Then in respect to the second question, if we would double the equity free cash flow, obviously, once we have recovered sales, Not entirely due to what I have mentioned before. So look, again, if there is a higher savings in respect to personal There are the savings in respect to personal expenses and also general expenses. Obviously, you have a higher profitability in respect to or a higher EBT level, which results in some tax outflows in that regard. So what you can assume is that probably around 2 thirds Of those savings will end up in the equity free cash flow. Then with respect to the amortization, I'm not sure if I understood the question right. If you were Talking about the impairments with it in 2020, then the answer is yes, that will lead to Substantial lower impairments or amortizations, sorry, amortizations in future periods, which are obviously significantly lower Done in 2020, leading to a higher profitability in future periods. And in respect to half year 1 and Half year 2, you're absolutely right. I don't have the information right in front of me. I know it by heart, but you're correct. So in the full year scenario where we assume a drop in sales of 40%, the first half year is Probably give or take in at around 65% drop in sales and the second half of the year is obviously then slightly better than the 40%, Giving a full year effect of minus 40%. Thank you. The next question comes from the line of Tom Gibney with BNP Paribas. Please go ahead. Hi. I just wondered if you could comment on your plans with respect to your November 2022 term loan maturities. And would you consider Doing a bond refinancing for those. Looking at respect to the refinancing, as we have mentioned before, we have started the discussions. We are currently While waiting and fine tuning different options, at this stage, I cannot tell you exactly what the plans are. We will only disclose that, obviously, once we approach the market. But what I can tell you is that the discussions are advanced and we have a very clear plan and we will execute that in due course. Great. Thanks very much. The next question comes from the line of Gianmarco Baro with Zurcher Kantonalbank. Please go ahead. Yes. Hi, everybody. Hi, Julian and Yves. Thank you for taking my three questions. First one On the JV with Alibaba and also the successful opening in Hainan. So From the press release, I was not reading anything about Alibaba being also involved. Now in the presentation on Slide 14, You also include that Alibaba is also involved in the cooperation with the Hainan Development Holding and the opening there. So do I understand then right that the Sales that you achieved there is not directly affecting your sales. It's more like an income from minorities as you hold minority share in this JV, that's the first one. Thank you. 2nd one is in relation to your planned expansion in food and beverage in the U. S. You again mentioned this target now, but did you also cut somehow your expectation in relation to expansion Plans in this category now for even the midterm? And then a third question It's really corporate governance question also. So what I just observed is that you or you reduced your headcount by Over 1 third now year over year. And at the same time, I just see in the compensation of the Executive Committee That you're paying out a special bonus, especially for exceptional performance. And For the whole Executive Board, this accounts for over CHF 11,000,000. I just don't get me wrong, I really I have high respect for your efforts, but it's also difficult for me to understand how you derive to the amount of the special bonus. Maybe you can also Give us some more light there, please. Thank you. Yes. Thank you for the questions. Let me start with the first one, the joint venture in Henan. The joint venture Genan has been, since the beginning, joint venture between the 3 parties Alibaba, HSDH and Dufry. As you know, we cannot invest in duty free in China. Still, we cannot invest as Tufi as international company. International companies are not authorized even to be investors or to be involved directly in the investment. As a consequence, what we are doing at this time is to provide services to the operation Through 3 different levels. 1 will be intercompany charges, the other one will be management fees and the other one will be Obviously, income from the joint venture company or dividends from the joint venture company with Alibaba. Alibaba is an important partner, probably the most important partner. But from the communication point of view, we have been all together, the 3 partners, Thinking that in terms of the relationship with the brands, it's more relevant that Dufry that has obviously these skills and these Value in the joint venture should lead the stereo the external communication. Regarding the plans for Tulum Beverage in the U. S. And in expanding the business, I think we are specifically in a situation And now more even more important, and you have heard this from us many times, that diversification is one of the main Alice, we're Dufry superstepforward. You can do it in the airport retail, you can do it in the airport environment, you can do it outside the airport Environment and the most obvious, I would say, in terms of development in expanding this diversification It's probably food and beverage. Is food and beverage a business where we are not familiar with? As you know, we have a significant Volume of sales generated today in Grab and Co in the U. S. And internationally, we have also some restaurants worldwide. Restaurants, obviously fast food restaurants, not sitting around restaurants. One of the alternatives in order to synergize The presence in the different locations through relationship with landlords, number 1. Number 2, synergies that could also be created due to the structures we have in the different regions Globally, could be an identification of synergies and at the same time diversification and the use of cash in a very efficient way. When and how, this is obviously depending on the circumstances. We are not talking about anything specific. What we are talking about is within the diversification And due to the collapse of the especially cruise lines, we believe that food and beverage within the environment of an airport could be a very good allocation of And the third one regarding the governance and the compensation. I think just for reminding how the process of compensation happens Normally every year, the remuneration committee prepares the targets for the company In a regular basis and in a non regular basis. When we started to discuss about compensation in 2020, Obviously, we were in the middle, absolutely in the middle of the collapse. We didn't have any shop open. The reality of the gas was very limited. We were under a significant stress. And the idea run by the remuneration committee was to create a set of initiatives With 2 targets. Number 1 is, let's try to do as much as possible in terms of the cost structure, reducing especially The most important lines of the cost structure. In terms of the special bonus, there were 2, 1 personal expenses, the other one was operational expenses. In personal expenses, what we try and obviously is a consequence of the decisions Righted by the Group Executive Committee, what we tried is to protect as much as possible the company for surviving. And I think the 2nd most important cost, as you know, after minimum annual guarantees or sorry, after rent, I repeat minimum annual guarantees because everybody's About minimum annual guarantees after rent in the P and L is personal expenses. As a consequence, as you have seen and you have Obviously, I analyze the situation. The huge effort and I am not talking about huge because compensation, I am talking about huge effort of All the levels of the organization, especially from the management team, achieved to reduce the number of people to 22,000 in 9 months Without creating a bigger problem. And this secured, in my opinion, very secured, The profitability, the generation of cash and the huge losses that we have even reported today. In March 2020, I think if you comment on that to anybody in the world, including the remuneration committee, nobody could believe that this could be done in 9 months. And now the reality, obviously, we are looking back with 1 year difference. The second block is operational expenses. In operational expenses, we have reduced A total, dollars 233,000,000 in 9 months. Cutting costs, discussing, especially, obviously, creating This relationship with landlords and other stakeholders. And the last one, and I think it's also very relevant, is to generate $2,300,000,000 cash To the different cash flow initially and this cash flow have not been reflected in any compensation package of anything, but this has also been there. And I think the remuneration committee that is responsible to approve these things, consider that the survival of the company At that time, looking at the situation, it's a very important, obviously, step in the relationship with all the stakeholders around Dufry. And they consider that this should be compensated. If 2021 probably The clear feature what happened in 2020 is very difficult because obviously this happened 1 year ago. But 1 year ago, the opinion of The regulation committee of Boralex directors was a fair approach in order to create the obviously good environment and support for the company. That's the only thing I can say. Okay. And the absolute amount of €11,000,000 how would you derive from that? Because just from my perspective, I think what you did is really tremendous, but it was also part of your job. Yes, obviously everything is part of our job, everything, from the top to the bottom. But the problem not the problem, sorry, it's not a problem. The subject is always the same. How you could identify what is really critical in the life of anybody And then the professional life of anybody that's happening in this time. And you may I accept that you may consider it's too much. It could be I don't know from your point of view, but I think what happened EUR 1,300,000,000 reduction in cost structure in a company In a period of time of 9 months, I think it's a very great achievement. And I don't like to talk about great achievements, believe me. I normally talk about different things, but in this case, it's a one off situation that has been compensated in relation with the size of the program. Okay. Thank you. All the best. Thank you very much. The next question comes from the line of Rebecca McClellan with Santander. Please go ahead. Yes. Good afternoon, Julia and good afternoon, Yves. Just a couple of questions from me. Firstly, you Talk about 60% sales capacity currently open with the aim of 65% by the end of March. You were to look at that 60% now, what's its hours traded versus a normalized sort of trading Sorry, Rebecca, I cannot understand the question. Regarding what we are performing now with a normalized performance. So in terms of the actual hours that the shops are open, so you've got 60% of So Okay. The shops are open normally between 60% 70% of the time. Right. The shops that are open normally are open between 60% 70% of the time. Okay. Sorry? In a normal situation, if you consider normal situation 100%, sometimes we open by 24 hours. The shops that are open so far are open between 50% 70% of the time, independently of the number of passengers, We need to obviously welcome any passengers going through. Yes, no, of course. And by the end of March, do you expect that Time components to increase? In March, no. By the end of March, I don't think so. I think if The situation is in the way we think it will gradually normalize. I think we are talking about here beginning of May and especially when the UK We'll if theoretically, we'll reopen on May 17 that is announced by the government. I think this will be a trigger in terms of intensive capital Human Capital in the Soaps. Okay. And the end of March, 65%, does that incorporate Any major change in the U. K? How much is open in the U. K. Currently? No, by the end of March, nothing. What it is now, 5% or 4% of the total? I think the plan for the U. K. Is going to be with the reopening and probably I am not sure now, but beginning of May, the shops in the U. K. Will start to reopen. Okay. And then we should see an increase in the hours traded Well, I suppose. Yes, exactly that. Yes. And my second question is more about sort of like going forward, we're talking about normalized Free cash flow, suddenly things potentially optimistically look quite good. And so to the shape of the market, I mean pre COVID, you I've had interest in Asia in sort of building up footprint in Asia. Has there been any major change in Assets on the market for sale and have you seen any major change there which that we should be following? Well, there is one, Rebecca, that probably you remember is our new operation in Istanbul, Sabija, Probably, this is the most relevant so far. But apart of that, not yet. Anything else? I don't think so. Okay. Thank you. The next question comes from the line of Eva Hochikova with Napier Park Global Capital. Please go ahead. Good afternoon, Julia, and good afternoon, Yves. Thank you for the presentation. Two questions from my side. And the first one is actually following up on my colleague. I would just ask a question about expansion to Asia. Does that relate to mainly to the beach, all the initiatives you do with Alibaba in China? Or do you also expect A significant growth in the other parts of Asia. And if so, how could you help me to sort of understand the magnitude of your growth? Because Historically, obviously, Asia was sort of underrepresented in your revenue split. So in the medium term, should we expect that Asia will take So the more prominent role in your revenue split and will be more in line with some of the other regions. And the second question is for you, Yves. Coming back to the impairment, which you recognized in 2020, could you comment a little bit more to what this impairment relates to? And Then quantify a little bit how much lower the amortization depreciation will be going forward. Thank you. Regarding the first part of the first question, Maria, I think the expansion in Asia for us remains and I think this is also in the presentation, Station remains priority number 1 in April retail. And the downtown is a business that We have already developed in especially Macau and in I think in Malaysia, we have also the downtown shops. What we want is not to just develop the retail. What we want to develop is the online retail In Asia. And for something similar to that, Alibaba is probably the best partner Possible in the scope of partnerships in Asia. The first step is clear is China. China offline and online. But this will have also an impact in the development of the other countries Because if everything is normalized, I am also Expecting that Chinese will play the relevant role that they have played over the past years in expanding the travel retail business worldwide, especially in Asia. As a consequence, and as you probably know, Chinese were the customers, I think, number 5 or number 4 worldwide. In Asia, we're the number one customers. I think we are critical the collaboration with Alibaba, as critical as obviously, we are trying now and this is something that I didn't comment when somebody asked me about The relationship with Alibaba, we are trying to connect the platforms, their platforms are not platforms, in order to reach, obviously, a better engagement with the customers. Is this a significant move in Asia? The answer is yes with the current portfolio And how to increase the life for life in the Cuban portfolio. 2nd part of the question is, if we are going to expand in Asia with Alibaba In terms of the same partnership that we are now doing in China, and this is a different conversation. I think we have not touched this in terms of how to do it. But I think from Dufry's perspective, it could be very important if we can create in China a good test, An example of how to operate both worlds, online and offline. And obviously, today it's very early to say if we can grow 5%, 10% or 20% in Asia. Just one comment before the crisis. Before the crisis, the possible development in terms of passengers or Customers in Asia was the highest in all the regions worldwide. We were talking about 9%, 10% per year. Again, when the traffic will be recovered, maybe it will be recovered in 2023 and 2024. But from this moment on, I think the traffic has recovered, May have again the same expectation between 9% 10% per year. But more on that I cannot say because it's very early and the development Thank you very much. In respect to the second part of the question about the impairments done in 2020. So look, if you look at the specific lines where those impairments have been done, then you will see that it's coming mainly In the line of right of use assets and concession rights. Both of those lines are subject to regular amortization. So the impairments done in 2020 can be seen as a timing shift. Instead of amortizing it in the future, we have impaired it in 2020. Or put it the other way around, and I think that's really important. As we have done the impairment in 2020, This will lead to a significant lower P and L charge in the future years and therefore a higher profitability in that sense. Thank you. Thank you. Thank you, Daria, for the questions. The next question comes from the line of Edouard Aubin with Morgan Stanley. Please go ahead, sir. Yes. Good afternoon, Julien and Yves. So Two questions for me. The first one on the competitive landscape. I guess despite the crisis last year, none of the main players In the travel retail space, at least to my knowledge, have gone under. So I was just wondering what your if you are expecting Some rationalization or consolidation to pick up this year. So that's question number 1. Question number 2 is on ESG as well. As you know, yesterday was the International Women's Day, and I cannot help notice that in your executive committee, you have no women. And correct me if I'm wrong, but I think it has been the case ever since the IPO in 2005. So just wondering why that's The case and how important is kind of promoting diversity for you? Thank you. Okay. Thank you for those questions. The number one is the competitive landscape has not changed yet. And I think if the question is, are you expecting in 2021 will happen something, I will be very brave to say yes, because I don't know. Okay. The reality is that the situation is very tough, especially in regions Like Asia, but I don't have information in order to confirm any straight question like that. The second one, ESG And the women participation in the group executive committee. Just let me remind one thing, is in the second level of the company, below The Group Executive Committee, we have more or less around 40% of the Group A management meeting and management level that are women. The question regarding the Group Executive Committee is right. We have not had since the IPO, one single woman in the LUBEX Equity Committee. We obviously Consider the situation, but the situation is not just to appoint somebody because we want to appoint somebody. The situation is how to create the base For not discriminating women in any position in the company. And I can promise you one thing, this is happening and it's confirmed because we want to do it In a proper and I hope that we can do it in a proper way very soon because we started around 4 or 5 years ago With the name Women at Tufry. The intention of this program is to really discuss Mainly this woman at Dufry is a group of executives in the second level of the company. Trying to understand why in the company We don't have positions or we don't have women in positions of the group's security committee. And the consequence of that It's in my opinion very promising. We have several today in the succession plan For the GLP Executive Committee, we have around 35% of the total candidates that are women, meaning that in the near future, We will have the opportunity to appoint a woman in the group executive committee. In any case, I accept what you said. I totally agree that this is something that suitables in the right way and in the right process and what we are trying. Okay. Thank you. Thank you. The next question comes from the line of Yvonne Xiao with Nansong Trini. Please go ahead. Hi, thank you very much for the clear presentation. Actually, most of my questions have already been asked and answered. I just want to confirm because I think I missed it during the presentation. Can you We confirm that about the 3 50 basis point write off on gross margin, is it 3 30 This is point on inventory write off and then 20 basis points on Tomo. Can you clarify that? Thanks. Yes, yes. Thank you very much for the question. I will clarify that. In 2020, the 600 basis points more or less that the gross profit margin dropped, only is 1.5 Percent of this has been due to discounts and promotions and especially impacting the commercial margin. All the other ones Due to the circumstances, for example, I mentioned 3.5% that is due to solid sense and liquidation of merchandise And the remaining part, the other 1.5% is the mix Of wholesale. Wholesale has a lot lower gross profit margin, even that productivity or profitability and level It's a good business, but from the gross profit margin point of view, it's very, very different than the retail margin. As a consequence, because last year, We had a significant drop in retail, wholesale had more importance in terms of the mix. And this is more or less due to 1.5%. And then I mentioned very small amount, 0.3% that is basically due To the let's say, the less efficient use of the transportation because volumes drop significantly. And I repeat then 2 things. One is, we are not expecting in 2021 the gross profit margin will be recovered, Will be dropped will be lower 100 basis points, 200 basis points in 2019, especially new to the Evolution of the sales because maybe we have to use also gross profit margin for attracting more people to the shops and being more aggressive in terms of commercial activities. And I also said in the 2nd part that if everything is recovering in the way that we are talking here, 2022, we'll see probably a recovery of the gross profit margin we had in 2019. I remember it was 50.2%. This is what I said. Thanks. So 350 basis points is For Infuongi, so actually the whole impact is 3.5 plus 1.5 plus not 0.3 because I think in your conversion you only set 200 to 50. Yes, it's 3.5 plus 3.1 plus 0.3 or less impact in 2020. Thanks. Your next question comes from the line of Volker Bosse with Baader Bank. Please go ahead. Hello, gentlemen, thank you for taking my questions. Thanks for all the detailed information you provided so far. Three questions from my side. First is For clarification, what are the numbers of outstanding shares at year end 2021 we should calculate with? And the second question is, given all the financial transaction which you successfully placed in the market, could you provide us Potential range of net debt or financial results for 2021? And the third question is on covenants. I Understand the covenants are on vacation, so to say, but you also mentioned from September to December, you had a kind of test with now Five times net debt to adjusted operating cash flow. Could you clarify that what does mean test and what is about the covenants Going forward, perhaps I also misunderstood something, but a bit of a buzz on that. Thanks. Thank Thank you very much for the questions, Oliver. So look, I will answer the 3 questions. For the first one, the average number of shares outstanding is give or take 80,000,000. To the second one, look, we don't give any guidance in that regard. So I cannot give you an outlook for the year 2021, which goes beyond What we have disclosed on the slides with the scenarios, it's actually Slide 2017 of the full year presentation. And then to the last question in regards to the covenant testing. This is actually the normal covenant testing we used to have In the past, I. E. Before the covenant holiday, the only difference for September December is that instead of having the normal 4.5 times testing, It's 5 times. So it's a slightly higher threshold in that regard. Having said that, it's important To remember what we discussed during the presentation, we have already approached the banks in regards to The covenants and also in regards to the refinancing and in that regard, we also addressed the covenants if need be. So you can assume that over the next couple of weeks months, we will have the discussions with the group of bank lenders. And if need be, We will address the issue with the covenant thresholds and take required changes if required. Okay. Thank you very much. All the best and stay healthy. Thanks. Thank you very much. Gentlemen, there are no more questions at this time. Okay. Thank you very much for participating in the call again. I hope next year we could do it in a physical environment. It's always more pleasant and also it's better to see face to face. Thank you very much 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.