Knot Offshore Partners LP (KNOP) 2016 Q1 法說會逐字稿

Good day.

Good afternoon.

Apologies, sir. Good day, and welcome to the KNOT Offshore Partners first-quarter 2016 earnings conference call.

(Operator Instructions)

Please note that this event is being recorded.

I would now like to turn the conference over to John Costain. Please go ahead, sir.

Thank you.

If any of you have not seen, the earnings release or slide presentation are both available on the Investors section of our website. On today's call, our review will include non-US non-GAAP measures such as DCF and adjusted EBITDA. The earnings release includes a reconciliation of these non-GAAP measures to the most directly comparable GAAP financial measures.

A quick reminder that any forward-looking statements made during today's call are subject to risks and uncertainties, and these are discussed at length in our annual and quarterly SEC filings. As you know, actual events and results can differ materially from those forward-looking statements. The Partnership does not undertake a duty to update any forward-looking statements.

I'll begin with the presentation. KNOT Offshore Partner's focus is on the shuttle tanker segment. Consequently, we have one reporting unit, the shuttle tanker, which transports oil from the offshore oil production unit to shore side.

It provides a vital service, and operates in the [premium and midstream space]. KNOT Offshore Partners is, in essence, a midstream mobile pipeline business with fully contracted, stable, non-volume-based revenue streams. The market will expand significantly in the coming years.

Low oil prices are beneficial to shuttle tanker demand, when compared to a fixed pipeline solution, as there are significant lower start-up costs. Nevertheless, in 2015, we [covered many] volume-based midstream contractor business, our Partnership unit price was strongly and unjustly correlated to the oil price. Recently, we have seen the start of a recovery in our unit price, although not without the expected volatility in today's markets.

Despite this, we continue to trade at a significant yield premium to the Alerian Index. We have many positives, a solid [cover] ratio, a [unique] fleet, a stable financial situation, excellent sponsors, and more stable to many MLPs, and solid growth prospects. The forthcoming offshore developments are deep sea oil fields, where the traditional MLP investment in fixed pipelines are not an option.

Shell had this to say in March, when launching Phase 3 of the Parque das Conchas off Brazil -- these barrels like other subsea tie-back opportunities across our deepwater portfolio have development cost advantages, and will contribute to the strong production growth we expect from offshore Brazil. Our sector is unique amongst many MLPs, in that [they wrote] no speculative for ordering of shuttle tankers.

So the Partnership should yield both stable and sustainable revenues. Before ordering a new vessel, our sponsor, Knutsen NYK will always agree a long-term employment contract with the charterer.

Now turning to the presentation, slide 3, financial highlights. For the first quarter of 2016, the Partnership generated revenues of $42 million, adjusted EBITDA of $33.1 million, and distributable cash flow of $17.9 million. We declared a stable distribution of $0.52 for this quarter, with a coverage ratio of 1.19.

We had an excellent operational performance of 99.8% utilization, in line with the year to date for scheduled operations, and 97.5% utilization taking into account the Bodil drydocking. Due to the increase in the price of the Partnership's common unit from $13.49 in December 31, to $16.40 on March 31, the Partnership elected not to repurchase any common units under its repurchase program during this quarter.

Slide 4 -- drydocking. In February 2016, the Bodil Knutsen completed its first special survey drydocking on time and on budget. This is the only scheduled [off-hire] for the Partnership in 2016. Four of our vessels are on hell-or-high-water long-term bareboat charters to Petrobras Transporte -- sorry, Transpetro.

The contracts are regulated by UK law. This means that except in the case of an event or loss, as defined in the charter, the charterer is required to pay the agreed [hire] every month. So these four vessels, Transpetro is responsible for all operating and [facility] expenses included in the drydocking costs.

Transpetro elected to subcontract all of the technical operation and management of these vessels to our sponsor, Knutsen NYK. As well as having a good overview of their maintenance program, our sponsor can ensure that the vessels are well maintained in accordance with the contracts.

Fortaleza Knutsen completed its five-year special survey dry dock in April. Recife Knutsen and Dan Cisne are also expected to complete their first special surveys during 2016. These drydockings will not result in any off-hire or costs for the Partnership, and therefore, will not impact the results of the Partnership.

Slide 5 -- Torill and Hilda Knutsen, Goliat Field. It is estimated that the Barents Sea contains nearly half of the undiscovered oil reserves in the Norwegian shelf. Goliat is the first field to be developed in the Barents Sea, and represents the world's most northerly offshore development. According to the operations of the field, its estimated lifetime is 15 years of recoverable reserves equivalent to approximately 178 million barrels of oil. Start-up production volume is expected to be approximately 100,000 barrels per day.

The Hilda and Torill Knutsen are two of three specially designed shuttle tankers, built to operate in this artic environment. Never before have shuttle tankers had to meet such strict requirements. Our vessels are ice-class and have been winterized, allowing the crew and, hence, the vessels to operate safely in temperatures down to minus 30 degrees C. Our experience and expertise positions the Partnership for future business in this harsh environment segment.

An important milestone for the Partnership was reached in March 2016, when the first oil was loaded from this field to Hilda Knutsen. Both Hilda Knutsen and Torill Knutsen are now deployed in their design capacity on the Goliat field. Prior to this, they were utilized in the general Statoil shuttle tanker program.

Slide 6 -- income statement. Total revenues were $42 million for the three months ended March 31, 2016, Q1, compared to $42.5 million for the three months ended December 31, 2015, Q4, a decrease of $0.5 million. The decrease was mainly due to reduced revenues from Bodil Knutsen as a result of its drydocking during Q1. This decrease is partially offset by the full quarterly earnings for the Ingrid Knutsen in Q1, compared to 77 days in Q4, as the acquisition of the Ingrid Knutsen took place in October 2015.

Vessel operating expenses for Q1 were $7.6 million, in line with Q4. And included within Q1 expenses is a $[200,000] charge for bunkers consumed during the mobilization before and after drydocking of the Bodil Knutsen. Q1 general and administrative expenses were $1.3 million, an increase of $0.2 million from Q4, mainly due to the year-end close expenses.

Operating income for Q1 was $19.2 million compared to $20.4 million for Q4. Net income was significantly impacted by the recognition of realized and unrealized losses on derivative instruments of $3.2 million in the first quarter of 2016, as compared to a gain of $2.1 million in the fourth quarter of 2015.

The unrealized non-cash element of the mark-to-market losses was $2.3 million for Q1, compared to a gain of $4.9 million in Q4. Of the unrealized loss for Q1 2016, $12.4 million related to mark-to-market losses on the interest rate swaps, due to the decrease in long-term interest rates. This was partially offset by real unrealized gain of $2.1 million, on the foreign exchange contracts, due to the strengthening of the Norwegian krone against the US dollar.

Net income for Q1 was $10.7 million, compared to $17.6 million for Q4. This equates to an earnings per unit of $0.38. If we adjust for the unrealized non-cash element of the derivatives, $2.3 million loss, earnings per unit become $0.47.

Slide 7 -- adjusted EBITDA. In Q1, the Partnership generated adjusted EBITDA of $33.1 million, compared to $33.8 million for Q4. Adjusted EBITDA refers to earnings before interest, taxation, depreciation and amortization. It provides a proxy for cash flow. And adjusted EBITDA is a non-US GAAP measure used by investors to measure the Partnership performance.

With a wasting asset like a vessel, a younger fleet in theory should produce lower EBITDAs for every dollar invested. The annual effect reduces the value loss in the early years. Younger fleets or assets also have longer to enjoy the anticipated improvement in this market. KNOT's fleet has an average age of 4.3 years, compared to the rest of the industry average for shuttle tankers, excluding KNOT, of slightly over 11 years.

Slide 8 -- distributable cash flow. Distributable cash flow was $17.9 million for Q1, compared to $18.1 million for Q4. The decrease in distributable cash flow is because of reduced earnings on the Bodil Knutsen due to drydocking, partially offset by [fourth] quarter earnings on the Ingrid Knutsen. There are no further scheduled off-hires in 2016.

We maintain our highest distribution level, which for the quarter was $0.52 per unit, equivalent to an annual distribution of $2.08. With this distribution, we have a coverage ratio of 1.19 in Q1.

Slide 9 -- balance sheet. At the end of March, we had a solid treasury position, cash and cash equivalents of $28.8 million, and an undrawn credit facility of $20 million. The revolving credit facility is available until June 2019. We have about $48 million of available liquidity, which we think is very comfortable given our predictable cash flow.

Total interest-bearing debt outstanding was $[663] million. Annually we currently have scheduled repayments of $49 million. This compares to replacement CapEx charge of $28 million [1Q] 2015 distributable cash flow. We do not have any loan maturities before the second half of 2018, and our cash flows indicate that we will maintain our current distribution level until this time.

The cover ratio has been normalized in the fourth quarter, and at [1.2] the acquisition of the Ingrid Knutsen. At the end of March, total Partners' equity was $516 million. With 27.7 million units issued, this equates to $18.60 per unit.

Slide 10 -- stable operation performance results in stable financial performance. Since the formation of the MLP, we have had very strong levels of vessel utilization, which means continually high and increasing predictable revenue, adjusted EBITDA, and discounted cash flow, as more vessels are added to the fleet. In Q1 we had a distributable cash flow of $17.9 million, and we will make a $15 million distribution.

Slide 11 -- unit price impacted more than the Alerian index by falling oil price. The Alerian index has 50 constituents, representing approximately 75% of the total MLP market capitalization. And it, therefore, gives a benchmark of unit price and distributions for comparison and evaluation of our MLP's performance.

After the IPO in April 2013, initially the market unit price was strongly correlated to the Alerian index, as the Partnership yield was comparable. However, since the oil shock, we have traded significantly [off the oil price evolution] throughout 2015, and that our yield has become significantly elevated compared to the index. And currently, although we have seen a significant recovery in the unit price, we have a weakening correlation to the oil price, we still trade at an elevated yield compared to the index.

Slide 12 -- earnings per unit of KNOP climbing throughout the downturn. Despite the sizable fall in the price of oil, our contracts continue to generate stable cash flows, and as a consequence of further acquisitions, our earnings per share have climbed stably. Profitability is not dependent on the price of oil.

Slide 13 -- low oil price, more cost focus. Today we have a low oil price environment. And to exploit deepwater reserves, oil majors are moving away from fixed pipeline investments towards the shuttle tanker, where there are much lower initial capital investment requirements, and greater flexibility. The current oil price will not reduce demand for shuttle tankers.

Slide 14 -- long-term contracts backed by leading energy companies. The Windsor Knutsen has been on a two-year planned charter from October 13, 2015, with Brazil Shipping I, a subsidiary of Royal Dutch Shell, with options to extend for a further six years. This relationship has broadened, as BG now a part of Royal Dutch Shell, have agreed charters for three further vessels, all rebuilds that (inaudible) has contracted at (inaudible).

As previously discussed, Hilda Knutsen and sister ship Torill Knutsen have commenced employment on the Goliat field. Of the original five-year contracts on the two vessels, on average, 2.5 years of the former charter period remains. Given the specialized nature of this contract, we would expect the vessels to operate on this field throughout its life.

The Bodil Knutsen, the largest shuttle tanker operating in the North Sea, is ice-class, and on charter to Statoil ASA until May 2017. There are two further years of options to extend, and the sponsor in any event, guarantee (inaudible) at the current level until April 2018.

Statoil has been given permission to proceed with the development of the Johan Castberg oil field in the Barents Sea, 240 kilometers north of Hammerfest. This should provide medium-term employment security for the Bodil. Four of our vessels are on long-term bareboat charter to 2020 through the Petrobras Transporte. These vessels are amongst the youngest in the Petrobras fleet, delivered between 2011 and 2012.

Dan Sabia and Dan Cisne are of unique size, and the Fortaleza Knutsen and Recife Knutsen have shallow drafts, with lots of thruster capacity. Three of these vessels will take their five-year special survey in 2016, one of which is completed. These vessels are heavily utilized by the charterer.

Delivered in 2013, the Carmen Knutsen is on charter direct for Repsol Sinopec until 2023. The Ingrid Knutsen was delivered in December 2013, and is operating in the North Sea on a time-charter for Standard Marine Tonsberg AS, a Norwegian subsidiary of ExxonMobil. This will expire in the first quarter of 2024. The charter has options to extend the charter for five one-year periods.

Slide 15 -- significant fleet growth since the IPO. Since the time of the IPO, our fleet of four vessels had an average age of about three years. Now three years later, we have a fleet of 10 vessels, which have an average age of about 4.3 years. All are backed by long-term charters. This combined with a strong balance sheet, makes us very well placed to expand in the medium term, as the MLP market recovers.

Younger assets appreciate more per dollar invested at the end of the period [reduces] a possible delay, as the rate of discount due to cash flows, reduces back end cash flows from younger assets appreciate the most. The average fixed employment of the current fleet is 5.3 years.

Slide 16 -- dropdown inventory -- five potential acquisitions. Today we have a further potential drop-down inventory of five vessels, the same as when we did the IPO, even though we've added six vessels to the fleet. The fixed contract periods for the drop-down fleet have a minimum of 5.9 years on average, (inaudible) depending on which series of options the charterer elects to take on delivery.

Slide 17 -- 17 is the summary. In summary, we have a very solid and highly profitable contract base. With a revenue backlog of $790 million, and an average contract duration as at March 31 of 5.3 years. We have a modern shuttle tanker fleet with an average age of 4.3 years, versus a rest of the industry average of 11.1 years. The Partnership is well placed and highly focused on expanding in the medium term, as both the MLP and the oil markets recover.

No one has more experience in operating the sophisticated shuttle tankers than Knutsen offshore, and we operate these assets with real expertise. We haven't had [many more off-hire] with 99.8% utilization in the last quarter, and 99.7% since the IPO, excluding scheduled drydockings. We have a large sponsor asset base, with the ability to capture a good portion of the expanding markets.

And that concludes the presentation. Please feel free to ask questions now.

(Operator Instructions)

And our first question comes from Hillary Cacanando of Wells Fargo. Please go ahead.

Hi, John. Thanks for taking my question. So during last quarter, the last call, you said that you won't consider another drop-down until your unit price reaches at least $20. So now that your stock is trading above $18. It's getting closer to $20. How should we think about a potential drop-down? Is this something that we could see sometime this year, or is this something that you're -- kind of a wait-and-see approach?

Well firstly, thanks for that question, Hillary. Well I first, I would like to say, we're very, very happy, that the unit price is going up, so heavily in the last quarter. I think what you've got to see, basically is a settling down of volatility. And then we'll evaluate what to do.

But I think generally, though pretty optimistic about the MLP now, and we do see it as a growth story again. I think when we were trading below $10 at the end of last year, you have to say, well, this is crazy. But today, the markets have really recovered.

And when we look at the general index, the Alerian Index, is below 10% yield now. But our stock is still about 12% yield. So we feel that we can -- this difference disappears, and we're well over $20 a unit, about $22 or $23, if we go to the main rate again, which we were not for the first year and a half. And at that sort of level, it's definitely accretive, easier to do drops.

I think today, it's pretty marginal. The problem today is the -- because the markets have been so volatile for so long, the [Sharpe] ratios if you like, when we look at the unit, although the unit have been very stable and growing. The market perception is definitely in the [quiet and liquid] small units, where a lot volatility in the price. And it has -- it would make a fairly heavy discount if we put -- if we went out onto the market and tried to raise money against the Company today.

I mean, typically, you'd probably be looking at [10% to 15%] discounts in the gross price of the units, if you'd [the] traditional way to raise an equity. So we -- we're very optimistic. I mean, we look at the way at the that the price has come back, and we feel very positive about -- I do generally think that, the MLP is viable again. We will look at it closely in the next few months. Our guess, is we have to wait for the [market] to stabilize.

Okay. Sounds good. And then just another -- just around the -- your debt maturity during 2018. I know it's still early, but I've seen some other companies that are starting to kind of, start the discussions with the lenders already, for a longer term maturity. I was wondering if you can kind of started any discussions with the lenders yet? I know it's still early, so it's -- ?

(Multiple speakers) We're always talking to the banks (inaudible). And as far as the maturity in 2018 goes, looking at how the fleet is developing, and it's basically around the Hilda and Torill, and obviously those charters. We firmly believe those charters will be extended. There is just no way that those ships aren't going to continue on that field. There's no indication that they won't, and there's no reason why they shouldn't.

And there's nobody else, I don't think that can provide that level of service that we do. And genuinely, when the extension comes on those two charters, we'll have -- we'll go and talk to the banks, talk to them about refinancing. But today, because the charters have only got about the next 2.5 years. I mean, this renegotiation will occur before the end of the charters, that's for sure, and then [we'll move] to refinance. It's just a matter of process really. If you haven't -- you don't go to the bank with out some -- (multiple speakers)

Yes, John if I could just also add, Hillary, we also -- this is Oystein, the [GP Chairman]. We also got this question on the Investor Day. And basically what we said is, that we don't like to pay unnecessary fees to bankers and lawyers to refinance our debt. There's 2.5 years left of the loan. It's actually just been running for half of its life, because it's a five-year loan. So this vessel has just started operating on the field.

So we are in no rush to refinance this note. We have plenty of cash on the balance sheet, and refinancing will just incur a lot of the refinancing costs. And I think it's better to pay it out of dividend.

Okay. All right. Sounds good. Okay, that's it for me. Thanks a lot.

And our next question comes from Spiro Dounis of UBS. Please go ahead.

Hi good morning, or good afternoon. I just want to maybe go back to the potential for a drop-down. And without getting too presumptuous, but of course, the Raquel Knutsen, I guess, is one option.

Obviously, I guess, it's really the only one at this point. Just in terms of financing it, obviously capital markets would need to open up again. And to your point, you're sort of waiting for that price to hit the right point. But just from the debt side of things, could we see, I guess, is there debt currently attached to that vessel, and would that simply just flow through to you? I'm not sure if you can disclose how much debt is actually fixed to the vessel itself?

John, I can answer it, since I financed the vessel in KNOT. Of course, all of the vessels we charter, we finance. And all the vessels we order in KNOT as sponsor, when we do the loan agreement with the banks, we pre-accept KNOP as a new owner. And we also pre-accept the financial covenants of KNOP.

So we can just -- when you sell the vessel to KNOP, they can take over the loan, as they have done with all the other drop-downs. And all the vessels in the [Gulf], in the (inaudible) five vessels are financed. So there's no -- it's not like we're running around missing money for them. So they are all truly financed, and that rest of the vessel today, is a bit above $80 million.

And so, in a drop-down situation, you could -- KNOP are free to decide whether they want to discuss with banks to take over as the guarantor, or whether they want to refinance the vessel in connection with the drop-down. Of course, taking over the loan means that you don't have to pay another set of arrangement fees and lawyers. So, of course, it's cheaper to take over the loan, because they can do it for free.

Got it. That makes sense.

And the margin got to -- (inaudible), Oystein?

Yes, the margin is 200 basis points. And the tenure is nine year, so you get a nine year loan at 200 basis points, and you get that loan for free. So that's the benefit, of course, for the MLP, that all the vessels they take over are fully financed. And KNOP, gets the option just to take over the debt, or they are free to pursue their own financing.

Got it. Good, perfect. And then, I just wanted to follow-up on the second question here, on tendering activity. And I guess, trying to figure out, John, I think you kind of spoke about this a little bit in your prepared remarks, just around the fact that this is a less capital intensive way to move the crude, at least initially. And I'm guess, I'm wondering, more in the 2019 time frame, if capital budgets are getting cut now, presumably that's really going to impact the production that comes online in the later years. And I guess, I'm just wondering, what sort of tendering activity are you seeing? When is the next big win going to come in for you guys, and maybe is that going to be the North Sea or Brazil?

I think both places. I mean, Brazil, the Shell has started the third phase of their Parque das Conchas project, and that's 20,000 barrels a day. I mean, they are quite high per tonnage. We've obviously got three ships on order for them.

I suspect with the oil majors, they will wait and see how the oil market and the newbuild market settles down in the next year or two before -- I think there's been so much volatility in the markets in last few months, that the oil majors will wait, and order quite late, because they want to see some sort of price settlements on the crude price really. But we don't see any cutting back on, on production. I think it's ramping up, I'd say, actually.

If you read the Shell messages, and they're very positive. And there's no doubt that Brazil, will definitely expand. I mean, when you have to look at the whole Latin America in the last 10 or 15 years, it's the only part of the world where oil production has declined. And yet, the Lula oil field in Brazil is one of the five biggest offshore oil deposits. And there is further fields in Brazil, so there's no reason for Latin America to be declining in oil production.

I know Brazil has ramped up a little bit, but we don't see any reason for Brazil to cut back. I mean, and in the North Sea, in spite of the low oil price, what's happened in Statoil, is Statoil has switched with the Johan Castberg field from being fixed pipe, fixed platform solution, to a FPSO shuttle tanker solution. So at $40 or $50, the shuttle tanker makes a lot more sense in the fixed pipe solution in the North Sea. And in Brazil, it's always been a shuttle tanker regime, because it's too deep. (multiple speakers)

Yes, Spiro, just to give you an idea here, how big we are talking about, the Libra field, there are nine FPSO coming for that field to operate. So nine FPSO producing more than 1 million barrels a day. With the [ton] mileage, you probably need 12 to 15 shuttle tankers, just for that one field. And then in addition, you have Franco and you have Lula, so the demand, of course, from the Brazil will be staggering. And in addition to this, you have our fleet, which has the average age of around 11 years. And that means that it is also quite a lot of demand for attrition. So what we said also at the Investor day, [Forness] their projection is that 48 new vessels within 2020, and half of this will come from attrition. So attrition demand is also fairly large.

Okay. Yes, so I guess basically, if oil were stay around this $50 level, which I think is arguably conservative, I guess. But let's say, we get stuck in this band 2019, 2020, it sounds like you should still -- your expectation would be that there'd still be at least a few tenders every year that you'd probably would win, I guess, at least half of them? Is that the right way to think about it?

I think, that okay, Forness had 48. But in Brazil, and Johan Castberg, you can easily produce at $40, $45. So let's say demand is 40 vessels, 10 until 2020, and half is attrition, and half as new. We have a market share of around 30%. So if we are to maintain the market share, we probably need to tender for, and charter to build at least 10, 15 new vessels.

Wow, all right. Good color. Appreciate it. Thanks guys.

(Operator Instructions)

Our next question comes from Ben Brownlow of Raymond James. Please go ahead.

Hi. Thanks for taking the question. You guys have made a number of comments around the production and outlook, and you've pretty much to some degree answered this. But I just want -- when you think about -- obviously, encouraging data points around the Hilda and the Torill. But when you think about the Windsor and Bodil, how are you thinking about those as being well-positioned for tenders past 2018? And what do you think is the recharter potential for those vessels?

Well, [what we think about the Bodil], because it's an ice-class ship. The Johan Castberg field, I think it's quite a good fit for that. We can't obviously say what Statoil's preference would be, but they like the vessel, and they've chartered it consistently since delivery, and they lifted the first option on the ship. The next two years, we have got two further options up to 2019. And when you think that three ships have been removed from Statoil program in the North Sea, then tonnage for them is quite high today. So there's not really a lot of surplus there, and that vessel is very heavily used in the Statoil programs, so we don't see that being an issue.

The [Ruins] is based in Brazil with BG, they like the ship. They have ordered three more in the back use of the Windsor. And they need -- they really have -- and the [MAV] expansion that Shell are doing, they really have a massive need for these shuttle tankers. We don't see an issue with Windsor either. We, obviously, the pay rates are not there on the cover for the time charter. But that doesn't mean to say, that there's not an opportunity for them to be fully employed for next five or so years at the very minimum.

I mean, you -- with these charters, because there is no where else for them to go. And they don't -- they like the ships. And there's no reason for them not use them. So we're very confident about both ships.

And because the market is expanding ultimately, that is the big driver. But if you're looking at contracting business and there are too many vessels around, there's the complete opposite of that. We've got an expanding business, and heavily utilized ships. So we're pretty comfortable with the situation on both vessels.

Okay, great. Thanks.

And also, I can also add that, the market for shuttle tankers are extremely tight. If you call up (inaudible), and ask if you can get a shuttle tanker, he will tell you there is no chance. Because there has been very little replacement of call it, attrition demand. All the new building, all of it now is eight vessels, where KNOT has four of them. But all of these vessels are going for new projects.

So there has not has been a lot of replacement of older tonnage without trading like [a co-op] rate, a contract of replacement in the North Sea. So basically, the last time anybody ordered some vessels for attrition demand was when TK ordered [Armistad]. So, of course, with that fact, you see that Shell has requested to get more options on the Windsor, so they have a better predictability of vessels in the fleet. And also, of course, Statoil also have a requirement in the North Sea, and right now, it's impossible to get any vessel.

Great. Thank you for the color.

I'm showing no further questions. I would like to turn the conference back over to John Costain for any closing remarks.

Thank you for attending, and I hope it's clarified a few things. And I'd like to get together in [five minutes], really. I don't have much else to say really. Okay. Thanks.

And ladies and gentlemen, the conference has now concluded. Thank you for attending today's presentation. You may now disconnect.