Esprinet S.p.A.

Good afternoon. This is the Coral School Conference operator. Welcome and thank you for joining the EspritNet full year 2021 results presentation. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Miss Giulia Perfetti, I am manager of EspritNet. Please go ahead madam.

Good afternoon and welcome everyone. Today we are presenting fiscal year 2021 results and we are sharing the business outlook for 2022. I would like to remind everyone that the press release, the presentation, and the podcast of today's call will be available on the Esprit website in the investor section. Before starting, I would like to draw your attention to the regulation notes on page 2 of the presentation. I am Giulia Perfetti, investor relations manager of EspritNet, and with me is Alessandro Pertanisi of EspritNet. Now I let Alessandro start the call and present the fiscal year 2021 results. Alessandro, over to you.

Thanks, Giulia, and welcome, everybody. Thank you for joining us in today's call. So today we'll firstly dig into the 2021 performance and slide number four of the presentation. I'm glad to say that for us this marks an historical record in terms of profitability. We have also exceeded our targets both with the guidance and I would say also the consensus. Sales during this fiscal year were up 4% at roughly 4.7 billion against 4.5 of last year. with a very strong first half and then Q3 was plagued by a very tough supply situation with vendors or suppliers having big problems in supplying the goods to be sold in light of the worldwide shortage of components that everybody probably has read about. Q4 took off on a still complex way, but then December was particularly good and we ended up with just the 3%. reduction against Q4 2020. So all in all, an excellent year. Even more so if we look at the profitability results with gross profit up 20% year-on-year and bid adjusted up 25% and the net income up 39%, net income attributable to shareholders stands at the historical record for our group. Cash conversion cycle stable at 13 days below the 18 days that we marked as our threshold, optimal threshold. Return on capital employed at 20.5%. It's more than a year and a half that we run a double digit. and net financial position positive more than 220 million euros. Now, if we dig into the P&L, I will comment later on sales. Let me give some color around the other lines of the P&L. Gross profit grew 20%, but what's more interesting, it grew percentage-wise from 4.33% to 4.96%. Almost all line of business were either with stable or growing profitability. We also enjoyed a better product mix. We'll see it in a moment. And we grew in Q4 as well with gross profit margins up from 429 to 453%. And that's even more remarkable because during the first three quarters of 2021, we consolidated GTI, which is a creative in terms of gross profit. But in Q4, we were having... year-on-year stable comparison because we began consolidating GTI in Q4 the previous year. So it's even more remarkable that we're growing. In terms of gross profit margins, both Italy and Spain grew. Italy grew 44 basis points from 472 to 516%, and Spain grew 92 basis points from 363 to 445. If we go to SG&A, As GMA grew from 125 to 146 million euros, most of this growth, roughly 15 million euros, came out of higher employee costs and was majority linked to the acquisitions. It's important to point that the employee cost is more than 57% of our total SG&A. We'll come back and comment this when we'll discuss about the inflation effects. We had more technology expenses because of the acquisitions and we had less cost of that debt because we had very good performance and then we had minor changes more or less on all other lines. If we look at the interest charges, 2.2 million euros of delta comes out of the interest of the exchange rate charges. Last year, 2020, we had positive effects of the foreign exchange conversion of half a million euro roughly, and in 2021 that was a negative by 1.7 million. Interest charges stood more or less stable at 2.7 million, And they represent mostly the cost of carry because we have cash at hand and roughly 140 million euros of mid-term financing. Most of the time we are cash positive. and this cash is not compensated by banks, which we keep on paying the interest on the mid-term financing. IFRS 16 lease charges stand at roughly 3 million euros. The last point on the tax rate is slightly higher, both for a slightly different mix between Italy and Spain. They have different tax rates. I remind you that we also paid $800,000 of settlement of a very, very old tax dispute that dates back to 2002, so roughly 20 years ago, and we paid it in Q3. So that's for the P&L results, an excellent Q4 as well. Very pleased to have enjoyed a strong quarter as well, and this gives us a good momentum into 2022, but we'll comment it later on. Okay, now if we look at the sales, we can see that our strategy of focusing on higher margin businesses and higher margin customers is paying off and is being executed. By geography, Italy was flat on the growth of the market, so we grew 5% as well as the market. We lost a little bit of share in Spain, 1% growth against 5% share against market growth. And we definitely grew aggressively in Portugal, 59% growth against 10% of the market. Spain, in particular, walked away from a number of very low margin deals in the retailer space. That's the reason of losing a little bit of market share. If you look by product category, IT clients and mainly PCs were down 1% against the market up 3%. Consumer electronics was up 2% against the market of 8%. And what's really remarkable, we grew the high margin business of advanced solution 46% against the market growing 6%. If we look by customer type, again, we focused on the professional market with IT resellers up 12% against the market top five. And retailers, we were down 1% mostly in Spain against a market up to 6%. So all in all here, the comment is a good year. But more and more our strategy of focusing on higher margin businesses has been executed consistently during the year, quarter by quarter. And you can see in the following slide when we look at by specific product line, we have compared the weight and the volumes of the different product lines year on year And you can see that PCs and smartphones, which were collectively roughly 66% of our total business, went down to roughly 4% in terms of weight, and they are now standing at 62%. Significant increase in the advanced solution space that is now representing 18% of our business against 14% last year. Very interesting performance in other IT products where we have accessories with margins even higher than the advanced solution space. And we're starting really to get some traction on white goods as well. It's small, but we are now close to the psychological threshold of 100 million e-horses. Now, if we look into the balance sheet, the key message here is that we have a very sound balance sheet as we have analyzed time and again. Net invested capital at the end of the year was 158.9 million against the previous year where we had 86.2. But that's mostly linked to net working capital. Well, I always remind investors that the end period figures enjoy very favorable seasonality, so we always urge our investors and analysts to look at the moving average that we report in the following slides when we dig into the working capital. We have proposed a dividend of 54 euros per share. So roughly a total distribution of 27 million euros. That's stable against the 2020 dividend, but we remind that the 2020 was the sum of 2019 plus 2020. as 2019 dividend payment was suspended in the spring of 2020 in light of the pandemic. And when we approved in spring 2021 the dividend for fiscal year 2020, we paid the dividend implicitly on 2019 as well. So it's even more remarkable that we are paying the same amount of last year. Payout stands at 60%. We have a standard policy of 50% but in the board we discussed about the possibility of keeping the dividend stable. We think that this is absolutely not impairing the capability of our group to achieve the growth targets that we have outlined in November when we introduced to the financial community our investment plan. Now if you look at the working capital performance, as you can see this is the dynamic with the four quarter moving average. We are stable at 13 days and the situation is stabilizing. We have achieved almost a steady state condition in our vendor payment terms that run steely between 60 to 70 days. We have experienced as a moving average some growth in the inventory but if we will look at Q4 only inventory that was consistently down as stated in a previous course we were expecting it to be despite of Q3 to be reabsorbed. and DSOs are almost stable. You can see better in the following slide where we give quarterly numbers and you see that compared to Q4 numbers of the previous year, we are more or less stable between 8 to 10 days negative in this case. That's for the working capital. All of this translates in a very healthy 20.5% return on capital applied pre-IFRS 16. For those of you that want to use a post-IFRS 16 metrics, that stands anyhow at 14.4% and we're stable in double digit on both kind of metrics. One last word before looking into 2022 to our ESG performance. Our ESG plans are moving forward pretty well. We have this ESG-centric strategy. We have introduced ESG targets in our remuneration policy. We are committed to climate neutrality with the direct energy emissions by 2023. We have launched 100% recyclable packaging program and we are well into this. Two out of the three biggest offices of the group are LEED Platinum certified and the second one is LEED Silver. and we are participating in different compensation projects in different geographies on the world. We are now up to more than 1,700 employees. We have achieved a Great Place to Work certification not only in Italy but this year in Spain and Portugal as well. And we have also achieved in Italy for the first time the top employer performance. And we have all of a series of local initiatives to address the relationship with our community. Well, moving into 2022, we have prepared a couple of slides, one that is focusing on what's happening in the environment and the market, and one about our performance. Let me start with what's happening in terms of supply. Well, H1 last year enjoyed high product availability whilst H2 experienced strong tensions. In this moment, according to all market analysts and also from the conversation that we had with the major IT manufacturers, the availability still challenged during this quarter. Partially in the second quarter we are already having clear signals of strong improvement in certain areas. PCs are getting better, not across the board but they are starting to get better. Definitely smartphones are not really back to normality. really, really better than before. We still are experiencing issues in certain product categories such as printers and networking and to a lesser standard service. But all in all, we expect to have most of the product categories back to more or less full normal situation by third quarter onwards. So all in all, analysts, vendors, and ourselves expect better 2022 than 2021 in terms of total shipments. So that's a very important point. As we entered 2022 with our historical record in terms of customer backlog, We're here forecasting collectively as an industry a 2022 that should receive more products than the products received in 2021. Let's talk about consumer and the business demand and then a few words about inflation. In terms of consumer demand, well, we all agree on the fact that the first part of the year, the consumer demand should be impaired by the mostly energy driven inflation. We are now also experiencing this Russian invasion of Ukraine, which could potentially drive a further reduction of consumer sentiment. We are not experiencing it yet. We have had talks with big retailers. Store traffic was tough in January, then it began recovering. Especially in Italy that was the case. Spain much better, much better. But so far the impact of Ukraine invasion on the sentiment has not been really perceived, at least that's what we have been told. There's more worry on the spending capability linked to the inflation. We all agree that as this factor is up, probably we expect that this might happen approaching the summer season. We should have the capability of winning the excessive savings, which is really massive, that has been piled up by investors during the pandemic. And this should provide support for demand. Different story for business and government demand. Here the dynamic of the business segment is really expected to be much more positive and we are experiencing a very lively market in this moment. And a further acceleration should be expected during the year as the public administration projects, those financed by next gen EU programs, becomes fully operational. A bunch of tenders are up and running both in Italy as well as in Spain and Portugal. But a lot more is in working and so we expect the market to be even better than what is now in the upcoming months. Inflation is an hot topic for everybody. Well, first and foremost, inflation is embedded into end-user list prices and normally the This is totally transferred downstream to our customers. So normally this has no impact on our P&L. As a matter of fact, theoretically, there could be even opportunities here because if quantities stay the same, revenues might grow because of the higher price tag of certain products. We'll see what happens in this sense, but definitely gross profit margin should not be impacted by inflation. potentially in a positive way. We are on the other side of course experiencing rising energy prices, but the overall energy bill of the group is very limited. Even more because the Spanish business had secured a two-year contract with fixed pricing of energy just a few months before the end of the year, of the previous year. So we are experiencing growth in freight costs to customers, which we are partially transferring to customers. So again, there might be an impact, but we don't expect it to be really significant. The real potential area of attention could be in the area of wages. As I said before, roughly 57-58% of our total cost, total SG&A, is employee cost. If governments, especially in Spain where they have more contractual opportunities in this sense, would raise minimum wages, we might have some kind of impact. Nothing has been even discussed by governments so far, so it's more of a theoretical long-term threat. But just to mention it, that's the area where, in case this happened, we would have to raise prices, well, to raise margins by reducing the discounts. So that's for what's happening in the environment around us. I close with the execution. January and February were not as January and February last year, but Spain is performing much better than Italy, and February was definitely better than January. All in all, since the beginning of the year, we are experiencing a tad less of revenues But the gross profit margins are particularly happy. The booming consumer sales that we experienced in Q1 last year makes the comparison in this year in terms of revenue is challenging. But on the other side, the business segment is in good shape. Product mix is excellent. So we have a good traction on gross profit side. And we began the year. with record levels of customer backlogs. And as long as we are experiencing constant improvement in vendor shipments, we do expect that this might help offset part of the tough year-on-year comparison. Over our renting program, the organization, the one that we announced in our November presentation, the organization in Italy is fully set up. Reseller recruitment is ongoing. We have very promising acceptance rates. Resellers are buying into the program. We have already a good pipeline of opportunities, few million users, and we have already a few hundred thousand users of contract one. Beginning of Q2 this year, the program will also be launched in Spain. And hopefully we'll start to add volumes from Spain as well. Advanced solution, as you know, is one of the key areas of strategic focus for us. Well, I'm pleased to say that not only thanks to acquisitions, but by organic growth as well, We grew 46% in a market that grew 6%, and our sales topped 870 million euros. It's quite an achievement, I would say, as we launched this program back in 2011. So in 10 years, we moved from 114 million euros to 870. Pretty remarkable, I would say, is our cloud solution sales performance. We were up 183%, significantly driven by acquisitions here. But we have closed the year with 141 million euros of sales. So really, really good performance. And we keep on focusing on revenue growth in this area. We want to increase the weight of these business lines with higher added value on the total revenues of the group. I can say that the performance of the first two months of 2022 is very, very good. So we are really happy and this is 100% organic growth. High double digit, really happy about the performance of the team. One last word about M&A activity. As we announced with our industrial plan presentation, We began the preliminary analysis aimed at entering other geographies of Western Europe. We will just focus on the advanced solution segment. Don't expect us to enter broad liners selling PCs, printers, or smartphones. We are also looking at opportunities in Southern Europe. In this case we are looking at niche players in the advanced solutions segment. But if we end up encountering high margin meeting, high margin businesses in peripherals as well, accessories, white goods or peripherals, that is an area that we might look as well. Of course, Portugal is always an area where we are interested to enter to grow our share even if our business is growing pretty healthily and we have done a hell of a job I would say. Our team there has been really amazing. We were across the 100 million euro threshold and we keep on growing during this first month of the year again a lot. Outlook 2022, well, I can say that even if we have still some challenges, even if progressively easing up in terms of supply, the first two months of the year confirm the effectiveness of our business model. Therefore, we expect to obtain in 2022 a further growth in our profitability in line with the provisions of our strategic plan, the one that introduced the financial community in November. However, as long as we always say we are living in an uncertain world and we want to go to the effects of the macroeconomic scenarios. exactly when the product supply will be stable. We prefer to present the guidance in terms of revenue and profitability for 2022 in the next month of May, on May 10, when we will present the first quarter results. Still, we are pretty positive about the growth that we might experience this year in terms of profitability. Well, let me just say that we are committed to the implementation of the industry plan, which stands, of course, confirmed with all its components. Generally speaking, the group is more and more focused on increasing the weight of the higher value-added business lines on our total revenues, so that solution on one side, services, accessories, white goods, and that rather than conquering further market share at any cost of less profitable customers and products. Not that we are walking away from this, but we definitely are no longer chasing growth in that area. Stability is more than enough. All focus is on the other side. And I think you have seen, we have been saying this for many quarters, and you have seen quarter by quarter this happening in the numbers. So we're pretty pleased with the performance of the group. Well, that's it. We have a number of upcoming events and shareholder meeting will be April 14. We'll bring to the attention of the AGM the cancellation of roughly half the median shares, treasury shares. And we'll ask for the authorization for a new buyback. We'll, as always, measure the market and see what are the best ways to allocate capital, organic or acquisition, organic growth or acquisitions. Definitely our dividend policy that we commit to a very generous 50% payout ratio and then If perceived by the board useful or interesting, we might, if the AGM will allow us to have the possibility to run a buyback, we'll investigate also in the future 12-month opportunities in buyback as well. Border director for the Q1 information will be on May 10 and will provide our guidance. That's all, and I let Coruscall to take back the lead. Thank you, everybody.

This is the Coruscall conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch-tone telephone. To remove your SAP from the question queue, please press star and 2. Please pick up the receiver when asking questions. Anyone who has a question may press star and 1 at this time. The first question is from Nicolo Storer with Kepler. Please go ahead.

Good afternoon, everybody. I have a few questions. The first one is on supply chains. Alessandro, when you talked before about a return to normal by Q3, I assume this is not assuming any further disruption from the Ukrainian crisis. And so on that side, which could be the problem arising, I've already read about, for instance, disruption in rail transportation from China to Europe, to Russia. scarcity in cargo flights from Asia to Europe, possible second cheap crisis. So which are the reasoning you're sharing with your suppliers about this? The second question is on gross margin evolution. I've seen in four quarter another Q on Q decline after that we saw between Q2 and Q3 so again if you can elaborate on that I assume this is mostly driven by mix but if you can confirm that. Third question is just if you can share with us a few numbers, turning to number your statement about, for instance, risk on energy bill, risk on bringing wages in line with possible new minimum wage in Spain. And also the performance in January and February, if you can spend a few numbers on this. And very last, a confirmation, did I understand well, you plan to cancel half a million shares with the next AGM. Thank you.

Okay, thank you. So I start from the last one. Yes, we confirm we have treasury shares roughly 3% and 2% roughly of those treasury shares are accrued to serve the three-year long-term incentive plan, which will expire in spring 2024. The remaining 1% will be canceled, and it's a little bit more than half a million shares. roughly 1% of the share capital. And we are calling the AGM, and one of the points of the call is to get the authorization to cancel these shares. So that's the first one. So starting from the first question, supply chain, Ukraine. Well, we had a few calls. So far, the impact from Ukraine were on supply chains. is not looking so relevant, almost not relevant at all in a differential way, meaning that the trains were already a problem months ago. And almost all of the trades have been done by C or by F. There might be a further growth in cost for the air freight because of the shutdown of the Russian air space. On average, the route from Far East to Europe is now roughly three hours longer. There's probably more cost there. Not a lot of the products come by air. The vast majority comes by sea. So the disruption in terms of supply chain is not really significant. Chip manufacturing is not affected by Russia at all. All in all, neither many assembly so we don't really expect issues there. Will there be some issues in terms of rare earth metals and other precious metals? Potentially, but the biggest supplier is in the end China. China has a lot of good relationship with Russia and they really like their money. So nobody is really expecting it to have an impact there. It looks more like an energy issue. overall, and definitely could be a driver of higher inflation, but that's been already affected. So all in all, expectation of supply chain issues apparently are not so high. Gross profit margin. Well, there's a seasonality aspect. Normally, the last part of the year has always a higher weight of of retail sales and of PC sales, and therefore it's pretty normal to have a decline. Year-on-year percentages are growing. During the first half of this, of 2021, we had some particularly healthy deals in accessories. This year we will have some of them. Possibly there will be a little bit more spread out across the year with less concentration in the first half. But in reality, the gross profit margins are improving year on year and we really are happy on this. On inflation, well, let's start from employees. In Italy, there's no central bargaining mechanism unless the government and the unions agree on changing the collective bargaining system and having a rise for the contract of all the people in the commerce sector, the collective bargaining contract that we use in Italy. Pretty much the same exists in Spain. I was referring to this. If governments and unions agree, and of course the employer organizations, Confindustria in Italy and COA in Spain, agree to change the collective bargaining contract, well, that might have an impact. Now, to give numbers, I don't know, let's assume that sometimes in summer, they agree to raise the minimum wage by 2% or 3%. You could guess that a portion of those 84 million euros that include not only the minimum wage, then there's additional cost on top of that. But let's assume, just to give a number, 30%, 40% is minimum wage which is affected by the collective gaining contract. It's raised by 2%. So 40%, 40 million 2% for let's say four months, six months or something like that. That's a few hundred thousand euros the impact on our P&L. Energy is really, really important. A total energy bill for the group is something less than a million euros probably. Roughly 40% of it has been managed by this two-year contract in Spain. Again, here a few hundred thousand euros of potential impact. Yes, we might experience some SG&A impact, but definitely We are one of the lucky few that is not expected to be aggressively impacted by inflation. The real point for us is what kind of impact we might have on especially consumer demand. As you have seen, we keep on reducing year on year the weight of our consumer sales. Last year, if you go back to our numbers, we grew our IT reseller market by 12% in a market that grew by 5% and we reduced our sales by 1% in a market that was growing 6%. So we are already walking away from unprofitable deeds because we are trying to grow everything that is profitable, either at the customer side or at the product side. So that's for what the inflation impact is. Well, in January, February, that was your last question. I said we are slightly down in terms of revenues as of today, let's say. But with retail sales, especially in Italy, more challenges. Spain is doing very well. The environment over there is better. And the product mix is particularly rewarding. We are having really good performance on advanced solutions that they are doing wonderfully. PCs, especially retail PCs, are the most impacted in these first two months. But they really are the least profitable product lines of our business. That's why we think we are progressing on our plans. Of course, if the market was better, we would be happier. We are living sad times, I would say, and this is also bad for the mood of people. We are living a magical moment in terms of the company. We really are pumped up. I'm sorry for the Ukrainian people and that crazy aggression that they are living in. And I'm also sorry for us because it would have been a fantastic moment if we had not experienced that dark shade of war on us because never ever the company has achieved such good numbers and had such a good outlook in front of us. Even with all the issues around inflation and the supply of products. Supply of products will be much better during the second half of this year. Last year, believe me, we suffered like hell. Second half of this year, we should have hopefully as an industry and we within the industry, a hell of a good half.

Let's keep our fingers crossed. Thank you. Thank you, Alessandro.

Absolutely.

Thanks.

The next question is from Francois Robillard with Intermontesim. Please go ahead.

Hi everyone, good afternoon and thank you for taking my questions. First one is kind of bouncing back on your last answer. You mentioned the record backlog of orders. Can you give us a bit more color on that? How much is the amount? What kind of visibility does that give you on first half figures? That's my first question. Second question is on cash conversion cycle. You managed to reach 13 days in 2021, yet your target is below 18. Does that mean we should expect the cash conversion cycle to keep on rising slightly in 2022? Your next question to this one will be related to the use of factoring. You used more factoring this year compared to last year. What should we expect going forward? Finally, on dividend policy, you mentioned a dividend policy of 50%. Can you just come back on that point and what can we expect for future years in terms of dividend payment also relating to the generous dividend policy in your plan? Thank you very much.

Yeah, thank you for questions. Backlog, well, we historically were trading at roughly one month, more or less, of backlog. In October, November, we were close to two months and a half. Now we are roughly two months worth of sales, of average sales in backlog. So we really have hundreds of millions of excess backlog and that is giving us a good vibe. Also because we constantly refresh the backlog. We keep on ringing customers. There's a procedure over there if it's still confirmed, and we keep on pruning the backlog, canceling whatever is too old or whatever the customer says, well, I'm no longer so sure, and we cancel it. So yes, it's a lot, a lot of money. Yeah. On the cash conversion cycle, I would say that we aim at staying below 18 days. We see an area of bouncing up and down between, let's say, 10 to 18. quarters that are a little bit overloaded and others that are lighter, but in general we want to stay in that area. We have been struggling a bit with inventory because of the routes in transit. We have a couple of vendors that invoice products when they leave their factory. And so that's considered already inventory in transit. And then we have inventory in transit when we ship to customers. And as long as a lot of times inventory comes at an expected moment, very often the very last moment of the month or the quarter, we have sometimes an excess of intrinsic goods adding to the customer. But apart from that, levels of DSOs as well as levels of DPOs are stable. That's the only major area of ups and downs of this level of inventory. But we expect it to be in that range. Factoring, in reality, we are trying to use it less. It mostly connected to the level of retail sales. It was up at the end of the year because there was a spike in December in volumes, which were allowed by unexpected shipments from certain vendors that were able to ship more than expected. But generally speaking, as long as we will decrease the weight of retail sales, the weight of factoring will decrease as well because it's mostly retail sales. And as for the dividend, well, generally speaking, we have a dividend. We have announced a dividend policy of 50% on group consolidated net profit. This year, we really didn't want to reduce the level of dividend against last year. Even if last year the dividend was indeed the sum of two years, it was still the old payout ratio of 25%. So it ended up being 60% and we said, okay, it's not that much more and let's keep the dividend stable. But generally speaking, in the future, we'd like to keep at least the 50% dividend payout ratio.

Thank you very much.

The next question is from Marco Vitale with Mediobanca. Please go ahead.

Yes, thank you. Good afternoon. I have a question on the recovery plan. I saw you mentioned earlier that you expect some sort of acceleration from the spending in IT from government. I was wondering if you could provide us any update on the tenders that you see and the Most importantly, do you expect any tangible impact on P&L for this year? Thank you.

Yes. The government P&R in Italy, next gen EU funds, as I'm speaking, is basically made up of two components. One is direct government spending, so let's say invoices that we we do to resellers that eventually sell something to the government And then there's an indirect support made up of tax subsidies to end users that invest, for instance, in Italy in industry 4.0 projects. So, for instance, edge computing for factory floor equipment. So the second part of the plans, which is heavier in Italy than in Spain, I would say, is something that is linked to the overall investments of companies. And we do expect this level of IT investment backed by tax subsidies to be pretty healthy during the year. But it's difficult to measure. What can we see in this moment of higher investment from companies in advanced solutions but also on accessories such as IOT equipment for the factory floor is something that is probably undirectly driven by these tax subsidies, at least to a certain extent. And then there's the direct government spending. In this moment we're seeing hundreds of millions of government tenders in the healthcare sector as well as in the education sector in Spain. We have already witnessed a few very large tenders being launched by the Consip Central Purchase Agency in Italy around networking, around cybersecurity, around cloud, and there's also some deals still around the PCs and service. Now we are trying to assess how much will turn into final numbers. Apparently during the second half we should have a very significant spike in tenders. Very significant means that there are assessments in the order of hundreds of millions. Now, this is also spread on local government tenders, MEPA in Italy, Red.es or Patrimonio in Spain. Now, whether we will enter all these tenders or just in part of them and whether we will win them, of course, through some of our business partners, that's another story. But the numbers are moving and are material. We have not yet finished assembling this number. We have our teams that are actively working on that. But vendors are working aggressively to secure their positions. As long as we are one of the biggest players in the government space in Italy as well as in Spain, we are asked by many vendors to participate in these vendors. So I think we should have a pretty good traction there, mostly in the second half. Okay. Thank you.

Ms. Perfetti, gentlemen, there are no more questions registered at this time.

Okay. Great. Thanks, everybody. Thanks for your time. And let's hope things keep on moving in the right direction. And we'll speak again on May 10 when we'll present our Q1 numbers. Thank you, everybody, and have a nice day.