Chocoladefabriken Lindt & Sprüngli AG

Good morning and welcome to the presentation of the Lind & Sprüngli Full Year Results 2020. Martin Huck, CFO of the group, and me are very pleased to provide you in the next 30 to 40 minutes with a detailed insight into our business activities in the highly challenging past year. First of all, I'm happy to present to you our group management members that have been again highly instrumental in achieving the presented results. In years as 2020, it becomes even more important to count on the insights and fast actions of a very strong and highly experienced management team that is unchanged to previous years. I'm very happy to count on Jennifer as General Counsel, the three country market responsibles, Adalbert, Alain, and Rolf, Guido in Operations, and of course, Martin as CFO at my side today. Today's agenda. First, we will give you an overview of the results. Then we follow on in the details of individual markets. the financials, sustainability as a big theme nowadays, and of course the outlook into the next two, three years. The key figures and achievements in 2020 is the next chart. The sales performance with a total of 4 billion sales and an organic achievement of minus 6% already has been published in January. I'm very pleased to report that thanks to measures, initiatives, quick reaction in place, we achieved an EBIT of $420 million with a margin of 10.5%. Net income is $320 million with a margin of 8%. Those results are fully in line with the forecast we have given in July. Very positive in our view is the development in operating cash flow and mainly in the free cash flow where we reached 470 million or 11.8%. Equity ratio suffered somewhat from the U.S. dollar development that declined strongly by roughly 10%, but the ratio still is very positive with a 57%. Further achievements during the year include strong gains in market shares in most countries, improvement in the U.S. organizational setup and performance, the doubling of our e-commerce business, and the acquisition of our minority partner in Brazil as well as the franchise partner in Italy. Another very important fact for me is the reach of the target to supply 100% traceable verified cocoa beans and last but not least, not to neglect an increase of the ordinary dividend by 4.8% or 50 Swiss francs to a total of 1,100 Swiss francs. Now, let's get to the most important one that accompanied us last year. That is, how did we respond to the pandemic? And if we look at what happened last year, then the fact of the pandemic closures Easter just hit us some weeks after last year's press conference. First of all, we had to make sure at that time to apply all protecting measures for our employees, what is definitely a big challenge in our factories. making sure that we can maintain the supply chain without disruptions, that we can supply raw material, pack material, and as well to control the logistics in and out of the factories. That was a huge challenge. Fortunately, we are well stocked. We were well stocked last year, and we had processes in place that needed quick decisions for adjustments, what we finally well achieved. First reaction in finance was clearly to make sure we minimized costs in all areas and optimized cash management. Net-free cash, for example. Important to know, we did not save in R&D, we did not save in marketing nor advertising in order to make sure we can assure continuous future growth. In all those efforts, our frontline employees in factory, logistics, purchasing have been key to make sure our product get to the consumers. My great thanks go to them all. Now let's move to the next part of our presentation, that is to give you some market insights into the individual geographies. First, I show you the overall split of sales. The Europe last year performing best with only a minus of 2.9% versus previous year. North America minus 6.8% and therefore it is dropping below 40% of the total share of sales. And the rest of the world area was heavily hit. Duty-free was the main reason, but as well developments in emerging markets as Brazil and South Africa that were weak. Before we go now into the individual markets, I would like to give you an overview of where we were hit and what happened indeed due to the COVID-19 impact in the individual businesses. Now if we go into the channels and let's go for the channels then of course the positive part was we were clearly increasing in our online sales channels. Online was doubling last year to a total of roughly 5% of our sales. At the same time as well, we were doing very well in wholesale. We were growing in most of our markets heavily in market shares. If we look at the negative side on the channels, then of course we were clearly hit by the fact that we have roughly 500 stores. Now, those 500 stores, depending on the country, depending on the market, was closed. They were closed. during the most important Easter season, but as well during the rest of the year, it was a little bit on and off depending on the lockdowns in each individual market. You can imagine that was hitting us quite heavily. If we go into the categories, the product categories, the most positive one is that we were growing with our clear focus products, that is Lindor and mainly as well Excellence. And Excellence was growing close to double digit. Where we were hit in products was Easter and Christmas. Christmas and with that the whole business in seasonal where Lindt is as a premium producer very strong. Now, going finally to geographies. In geographies, the positive part is that we were growing in markets, in big markets in Europe like Germany. We were growing in the UK. We are growing in Nordics. You see it on the chart. So we have a lot of products and markets where we had good growth. Ghirardelli baking was as well a very exceptional performance. Now, on the negative side of the geographies, we have emerging markets that were hit heavily in the whole economy. We had as well, on top of all that, we had clearly duty-free because, as you can imagine, in duty-free, no traffic at airports and duty-free is a big business for Lind and Springly. That gives you an overview of what generally happened. You can say that Stores were hit, duty-free was hit, and last but not least as well, I didn't mention Lindt Italy that is heavily dependent as well on the so-called traditional stores that are little independent shop owners that of course as well were unfortunately hit very much last year. Now let's go to the individual markets. We have the market split Europe. And if we look at Europe, the single biggest market is clearly Germany by France and then followed by UK. Now, UK overtook Italy in 2020 for the first time. Then Switzerland is ranking number five in this European group. And included in the rest of Europe are Spain and Austria, taking rank number six and seven, and as well performing quite well last year. If we go to the highlights in Europe, the good news are market shares. We made good progress across all markets, gaining in the universe of Nielsen in grocery. The COVID impact is seen via closures of owned stores, missing tourism, and lockdowns during the seasonal business. As I said, the biggest hit we had in Italy due to the very big Easter business we have in that country. On the product side, we last year successfully launched Hello Vegan in Germany. And Lindt squares in Switzerland are just hitting now the market. Both products are doing very well according to the first reading of sell-out results. Other achievements to mention include the opening of the biggest Lindt stores here in Kirchberg at the Home of Chocolate and as well the acquisition of the Lindt store network of Selectrade, our franchise partner in Italy. Now, To lighten a little bit the presentation, I am pleased to show you a TV spot that is actually just aired in Switzerland for the launch of our Lindt Squares. Now let's get to North America and the market split. In combination, there are three countries. It is Canada, USA, and Mexico. And this geographic segment reached a total of 1.5 billion Swiss francs. Clearly, the leading market is the U.S. with the three companies, Lindt, Ghirardelli, and Russell Stover, followed by Lindt Canada and Mexico. The three U.S. brands are complementary with the Lindt product or the Lindt company being a European specialty brand. highly premium. We have second Ghirardelli with a San Francisco domestic U.S. heritage. And last but not least, Russell Stover covering assorted and seasonal pralines, mainly as well as During the main seasons they are very strong in Valentines, they are very strong in Easter and last but not least as well in the assorted products during the Christmas period. Now all three companies they reach a weight of roughly one-third of global linked sales. Now let's get to the highlights in North America. And as in other markets, as I said before in Europe, the store closures, seasonal gifting, Easter, Christmas, and the Ghirardelli food service were impacted most. The good news again are that the market share gains we achieved are very substantial with all brands in all three North American markets. To be mentioned on the positive side is as well that the Ghirardelli baking division benefited from the fact that the in-home food preparation, including baking, increased strongly in the market. Now, the last two, three years, we reported on needed streamlining of our operations in North America. I'm very proud that I can further report now positive news from our ongoing projects for improvements of the U.S. business, be it in structure and as well processes. Number one, logistics, combining logistics among the three companies. That project in the meantime has been completed successfully. If we talk about production, we unfortunately had to close one of our Russell Store factories. That as well is completed. The project started in June 2020. Now the next one is that we as well streamlined our retail store network among the three companies. And last but not least as well, we outsourced our merchandising force. In combination, all those measures clearly will strengthen our U.S. network among the organization. Now let's get to the rest of the world segment. And as I already told you, The duty-free and emerging markets sales with own lend units and distributors suffered economically. The duty-free business came after a good start in the first two months in 2020 practically to a halt. On the positive side, we have two markets doing very well. It is China and Japan with over 10, respectively, 7% of sales increases. Despite the short-term complex business environment, we look definitely forward via an unchanged strengthening of the store network in Japan and Brazil. And in Brazil, we in addition last year could acquire the minority share of our joint venture partner. Now again, to give you a little bit of an insight into our activities in China, a huge market in chocolate and as well clearly with a lot of potential. And I show you the TV spot that was broadcast via digital channels on the occasion of the Chinese New Year 2020. The TV spot is starring the well-known Chinese actress Xin Xilei, who supports our advertising activities in China.

Last but not least, in my presentation of the actual 2020, I would like to

Look at the e-commerce and digital performance last year. We started in 2018 actively to strengthen our e-sales by developing and afterwards implementing a OCR omnichannel retailing strategy. This includes the sectors, the own e-commerce, our stores, global platforms like for instance Amazon, and the so-called click-to-mortar customers, that is our customers like Coopronto or Tesco.com where as well they are strengthening their efforts in that area. We are happy to have reached 5% of our sales in 2020. We gained further experience to strengthen business even more in the future. We expect increasing our sales via the newly launched Lint e-com websites, where we already started in five, six countries in the meantime, and will be rolled out to all our countries during 2021. Among the many creative initiatives, I want to mention our online METRA courses in South Africa and the UK. Now, how did it work? I think you can inscribe yourself in advance for a METRA Chocolatier course. you get a full box of ingredients, and then afterwards you can participate via the web with a digital meter giving instructions on how you have to cook, on how you have to bake, and at the end, of course, on how you can enjoy your delicious meals. So with that you see what we had to do last year is in a lot of countries a little bit out of the extraordinary. We were forced, we were as well pushed to become creative and I think that will stay in our organization for the next years. And with that, I conclude my part of the overview of the result 2020. And I would like to hand over to Martin that will give you more insight and details into the financial performance.

Ladies and gentlemen, it is my pleasure to welcome you to this year's Linden Springleaf Financial Results Conference. And as usual, I will give you on the next few slides an overview of the most important financial numbers. I start with a summary of the key figures which demonstrate our ability to limit the impact of COVID-19 on our business to the extent of even improving the free cash flow margin as it is sent to sales. to 11.8%. Organic growth was minus 6%, which is in line with our full-year guidance that we gave out in July 2020 of minus 5% to minus 7%. Debit margin came in at 10.5%, which is even slightly better than our guidance, which was around 10%. Net income coming in at 320 million, which is 8% of net sales, Free cash flow, as I mentioned, I think a really great number here is 470 million or 11.8%. That leads us to our net debt position of 200 million. If we exclude the lease accounting, we even have a net cash positive of 250 million Swiss francs. Looking at the dividend and at the shareholder return, you know, we have increased our dividend each year. And for this year, we are proposing 1,100 Swiss francs for the registered share and 110 Swiss francs for the participation certificate, which is higher than last year. Last year, we also had a special dividend for the 175-year anniversary of Linden Springlim. Dividend yield at 1.2%, which is more or less in line with the last year's. Payout ratio is 82.5%, which is actually at the same level roughly as last year, but higher than in the years 2016 to 2018. And this shows the extraordinary impacts we had in 2020 on our business. In terms of the market capitalization, we're coming in at 21 billion, which is, for the first time, above 20 billion. It's actually roughly 1 billion higher than at the end of 2019. Let's move on with organic sales growth. I've already mentioned this, minus 6.1%. You know, when we gave you the guidance of minus 5% to minus 7% during the half-year conference in July, we... We said that we assume that there will be no further lockdowns. As you also know, in November, December, we had quite major lockdowns. And despite that, we have been able to achieve this minus 6%. I think it's also great to see, as Dieter Weisskopf already mentioned, that we have been able to increase our market shares in most important chocolate markets. So it shows us that we are really well positioned for the future. Sales growth in Swiss francs was minus 10.9%. You know, once more, Swiss francs strengthened against the major currencies. So we had a negative impact here of 4.8 percentage points compared to the organic sales growth. Let's break down now the sales numbers in price mix and volume. So the minus 6%, you can really see here, roughly minus 2% is coming from volume, minus 4% coming from price mix, I think the good news here is within the price mix element, price was actually slightly positive, thanks to some price increases we implemented in some important strategic markets like Germany and Australia. As I mentioned before, Forex had a negative impact of 4.8%. Dieter has already talked about the segment, so I'm just going to be very brief here. Europe was more resilient, thanks to the very good performances in Germany and in the UK, where we saw small growth. And also Scandinavia and Spain, where we saw also the business growing. On the flip side, you know, wherever we have a big Easter business, such as in Italy, in Austria or in Switzerland, we had a bigger impact. In Italy, we had even closed traditional retail stores during the important Easter months of March and April. And in Switzerland, we basically had a complete absence of tourists. North America at minus 6.8%. I think... These numbers actually don't show us some of the very positive underlying trends. In Lindt and in Ghirardelli in the US, we grew in wholesale. Of course, we had an impact in our retail business. We declined actually double digit because of the fact that a lot of our retail stores are in touristic locations in the US. The important food service business of Ghirardelli also suffered because of closed restaurants and cafes. Russell Stover is really focusing on the important sharing and gifting segment. And for Russell Stover, we had a good start with Valentine's. And then, of course, during the pandemic, we had an impact in the Easter season and also in the Christmas business. On the other side, the sugar-free range of Russell Stover had a very good performance and crew actually double-digit. Let's move on to rest of the world. We had here a decline of 16.1%. And, you know, we actually report the entire travel retail division in rest of the world. We had a good start into 2020 with travel retail. But, of course, after the pandemic, the 10 months from March to December, the travel retail business basically came almost to complete standstill. China had a good performance, was severely hit in the beginning as the first country that was hit by the pandemic, but could recover well and we could actually show double-digit growth in China. Also Japan being quite resilient with mid-single-digit growth. I have no doubt that going forward after the pandemic, rest of the world with big chocolate markets in there and a lot of premiumization potential for Lindt will see again double-digit growth in the mid-term. Let's move on now to the cost side, and I start with the material costs. Material costs came in at 35.3%, about 170 basis points higher than in 2019. We have a couple of effects in here. First, sales per ton declined because of the mix impact. Secondly, the costs of cocoa beans increased slightly because of living income differential that was implemented in the second half of 2020 in Ghana and Ivory Coast, relevant for us Ghana. Hazelnut prices also increased. So let's move on now to the topic of COCOs, and I'm showing you a separate chart here on the COCO bean futures. If you are looking at the current market, we are roughly trading at 1,700 pounds per ton. When we go back one year, it was roughly at 1,800 tons per pound. We should bear in mind that the living income differential is not part of this future price, and as I said before, it was implemented in October in Ghana and Ivory Coast. $400 per tonne, which equates to roughly £300 per tonne. If we add this back to the futures, including the living income differential, we are currently actually at about £2,000 per tonne compared to the £1,800 one year ago. So you can see that the underlying cocoa bean price is slightly increasing. We have different trends in here. We have a supply which is slightly bigger than the demand. We have overproduction currently for the crop 2021 of about 200,000 tons. So that's the reason why the future market itself came down. But as I said, including living income differential, we have slightly higher costs for cocoa beans. At the same time, actually, cocoa butter ratios came down from about 260 to 230. So if you combine those two effects of futures, living income differentials on the one side for the beans and cocoa butter ratios, our costs for 2021 on cocoa as a total will be roughly at the same level as in 2020. Personnel expenses coming down by about 100 million. I think this shows that we have been able to offset a lot of the volume impact. Stores were closed, so we needed less temporary staff. As you have seen in the beginning, we have had slower or lower volumes in our factories, which also meant that we didn't need all the temporary staff in our factories. So 100 million less here at 22%. I think going forward past the pandemic, this number will be again below 22%. Number of employees came down by 1,000 from 14,600 to 13,500. We announced one year ago the streamlining for growth initiatives in the US. We closed actually the Colorado factory for us over in August, which was even earlier than planned. That was one element that led to this reduction in full-time equivalents. The second one is also the outsourcing of our merchandising team in the U.S., which we also announced one year ago in January. So those impacts, those effects coupled, of course, with what I said before, with the store closure, temporary store closure, where we needed less temporary staff and also... less volume in the factory. So all those elements led to this reduction of 1,000 full-time equivalents. Let's move on now with operating expenses. Within the category of operating expenses, we have a few elements. On the one side, we have advertising. We also have some fixed costs of the sales force and logistics. As Dieter Weiskopf already mentioned, advertising is not a cost element that we reduced. We actually increased advertising even slightly compared to 2019. Logistics, on the other side, benefited a little bit as well from, well, first and foremost as well from the US project, which has brought cost savings, but we also had less volume that we had to transport, so we have some variable costs in there. So this led to a... Reduction of roughly 80 million in operating costs overall, and the ratio going slightly up from 24.7% to 25.9%. Depreciation and impairments. You know, in here we have two things. We have impairments from the IFRS 16 standards. which is about 70 million. And then we have the underlying depreciation, which is comparable as well with the numbers 2016 to 2018. In 2019, we had the extraordinary impairments in the US. So this number is not comparable. This was more than 50 million. So if we take the underlying depreciation in 2020, it was 206 million. If you compare it with 2018, it was 180 million. So you can see an increase of 26 million. The key driver of that are really the CapEx programs that I talk a little bit, which I will talk about a bit later. In the U.S., CapEx is higher than our overall depreciation, so that has led to this increase in depreciation and impairments. So operating profit came in at 420 million. or 10.5%. As I mentioned in the beginning, this is in line with our guidance that we gave in July of around 10%. The ratio came down from 13.2%, and also overall the number came down by about 170 million. And the reason for that are really all the factors I talked about in my previous slides, COVID-related. When we break down EBIT by segment, Let's focus here on the middle column, North America. North America, before restructuring in 2019, was actually at 9.0%. So we had a small decline here of 320 basis points in North America, which is smaller than the decline in Europe and in the rest of the world. So this shows us that the measures we are implementing in the U.S. with the streamlining initiatives, but also all the other projects and cost savings programs we have in North America, they're paying dividends. with this smaller decline than in Europe and in the rest of the world. Also, I'm convinced that in North America going forward, all these projects will lead to a quite nice increase of the EBIT margin in the years to come. In Europe and in the rest of the world, the reasons for the decline are COVID-related. They're really driven by all the reasons I talked about in the last few slides. Post-COVID, Europe will come back to an EBIT ratio of 19% to 20% and the rest of the world to 17% to 18%. EBITDA was more or less resilient as well with 700 million or 17.4%. We had a lower EBIT, so of course EBITDA also came down. We had special effects in 2019 with the restructuring, the impairments. But overall, I think no big surprise here with the EBITDA, which is as well on target. Free cash flow is really the positive news. Free cash flow came in at $473 million. You know, last year we had actually, or 2019, we had a record free cash flow with 530 million or 11.7%. Now we came in even slightly higher as a percent to net sales with 11.8%. We had really a good network in capital management. We have been able to reduce inventory. We have been able to reduce accounts receivable, which led to this positive free cash flow. It's higher than in the years 2016 to 2018, as well as an absolute number, which I think is really a very good result. Capital expenditures coming in at 249 million, as well as in the guidance. I gave you a guidance of 230 to 250 million in July. We came in at 249 million, lower than we anticipated one year ago when we thought we would be rather around 300 million. driven mainly by the New Hampshire build-out. You know, the New Hampshire factory, the Lind factory in the U.S., which is above $200 million, and we have been able to reface some of these investments because of the volume drop. Especially in the retail division, we have been able to manage that and to push this project a little bit out to reface it. That also means that going forward, we expect CapEx to be back to about $300 million in 2021 and in 2022. I think also some good news on the tax rate. It's below 20%, even below 19% at 18.8%. We had some special effects in 2019 because of some special effects we had in tax. We shouldn't compare this number, actually. The 2019 number is 2020. In 2020, we had also some positive effects from the Swiss tax reform. And the underlying tax rate is actually rather below, around 21 to 22 percent. And I think that's the tax rate we have to look at when we think about 21 and 2022, somewhere between 21 and 22 percent. Net income coming in at 320 million. If we exclude the extraordinary impact in 2019, net income was actually more resilient than EBIT. There are two factors. The one we have just talked about now, which is the tax rate, which was 18.8%. And then secondly, we also had lower financial expenses because of lower U.S. dollar interest rates. So we've been able to save quite a lot of money in the hedge costs for the U.S. business, leading to this better performance of the net income at $320 million. So let's now look at the net financial position. The very positive free cash flow of $473 million, which I've already talked about, has really driven this improvement of more than $200 million to $209 million. And let's also bear in mind that we have paid out a special dividend in 2019 because of the 175-year anniversary of the Linton Springer Group. We paid out a total dividend of about $420 million Last year, and despite this special dividend, we have been able to improve the net financial position to 209 million. And this net financial position also includes the lease liability of 460 million. So excluding that and on a pure cash basis, we would be on a net cash position of 250 million positive. We have a liquidity on the one side of 1.25 million at the year end, and we have 1 billion bonds outstanding. So those two lead to this 250 million net cash position, excluding the lease liability. That brings me to my last chart, the equity ratio. We have a very strong balance sheet with high liquidity, as I've just talked about. Dieter Weisskopf already talked about the impact from the US dollar here, but we have still an equity ratio of 57%, total equity of 4.6 billion. And, you know, the strong liquidity and the strong equity ratio led us to decide to launch a share buyback program that Dieter Weisskopf will talk about in detail now. Thanks a lot for your attention, and I hand over now to Dieter Weisskopf.

Thank you Martin and I would like now to get to an overview of our activities in sustainability or you can say environment, social and governance. The topic of environment and social as integrated part of our business model is and has been taken seriously already long ago and it is even more so today top urgent. The theme is at the top of the list by me as CEO and already was in my former role when I was initiating the farming program back in 2007 and 2008. It has to be part of our premium business. Any consumer is expecting from Lindt highest standards which we clearly are committed to fulfill and we have plans in place. The goals we have achieved in 2020 makes us very proud. First of all, we have achieved our first goal we have set already back in 2008. we wanted to have 100% of our cocoa beans traceable and verified in our own lent farming program. Just to give you an idea, from a total of 80,000 farmers in five origin countries, we have now full traceability of cocoa beans. The reduction of greenhouse gas emissions is probably the most urgent task of our and future generations. And Lindt as company is ready to contribute its fair share to it. In scope one, that means our own production process, we could reduce emissions per ton by 10% since the benchmark year 2015. Another goal we achieved in 2020 is to set target to reduce our water usage in the production process by 10%. But this is not all. I think now we have to look ahead and say, you know, what are we going to do in the future? Now, past and future efforts to support our sustainable business model are They have been defined in our strategy. We have said some years ago we call it the sustainability wheel. This sustainability wheel consists of four main segments. They are, number one, improvement of livelihood in the supply chain, mainly, of course, looking at raw materials and packaging materials. The second area of that wheel is the environment. The third area is our business conduct. And last but not least, we have the consumer focus. I will go now quickly into the different segments of our sustainability wheel. Now let's start with the livelihoods. When you look at livelihoods, sourcing, raw material, pack material, we have to address first two big issues in our supply chain related with raw and pack. Goals we have set include that we have already achieved 100% traceability on beans 2020, And we will extend this program now to cocoa butter and powder where we want to be as well 100% traceable and verified by 2025. And as well, we extend it to the rest of all other raw materials where we want to achieve a rate of 80% traceable verified by 2025. Now, the next part of our sustainability strategy is looking at the environment. Environment including, of course, carbon emissions. Includes as well water usage, waste and biodiversity. We will set our new targets for the continuous reduction of water as well as the targets for greenhouse gas emissions in the next months. Already decided now by our board of directors is that we will move in regards of the carbon reduction to a science-based target. The waste reduction in production as well should be achieved by 2025 by reducing 50% of our total waste. The next part in our sustainability strategy is looking at, we call it, performing together. As you know, addressing topics of diversity, inclusion in our workforce, and of course, as well, health and safety have a very big part in our strategy. Respective programs are in place in health and safety, to work towards zero lost time accidents, and of course we have as well programs in place that are looking to foster the whole area of diversity and inclusion. Needless to mention as well that we apply highest standards of compliance with the laws and regulations of each country in which we operate. And now the last part of the sustainability wheel is looking at our consumers. And looking at our consumers, they are in the focus of our daily efforts. Highest quality in ingredients, highest quality in recipes, and final products are key. Marketing, communication, and food safety fully comply with highest standards in the respective countries. With that, I hand over to Martin again that will give you now some more insights of the status of our farming program for the sourcing of our cocoa beans.

Linton Springley is one of the few chocolate producers that produce from bean to bar cocoa. Most of our competitors actually buy chocolate. And the fact that we are producing from bean to bar has led us to decide in 2008 to launch our Linton Springley sustainability plan, focusing on the sourcing of cocoa beans, because we really want to know from where cocoa beans are coming from. And I will give you now an overview of this Linton Springley farming program. What are really the objectives here? One, we want to increase the productivity of the farms because that's a win-win for the farmer and for us. Farmer can increase their income and we can source high-quality beans in higher volumes. We want to help the farmers to diversify their income by launching additional income streams. Then child labour, for sure, is always an important topic and we want to reduce that. Finally, we want to improve the infrastructure of the communities. We have launched the Linton-Springley farming program in all our five cocoa bean origins in Ecuador, Dominican Republic, Ghana, Papua New Guinea, and Madagascar. The most important origins for us are Ghana for consumer cocoa and Ecuador for fine-grade cocoa. I will give you now an overview of what we have achieved with the Linton Springly Farming Program in the last years. We are working with more than 400 trainers on the ground that train more than 80,000 cocoa farmers in those five origins. We have been able to train more than 20,000 farmers on diversifying their living income with programs such as honey production, or also livestock farming, and this really enables the farmers to diversify their income from cocoa. Also, we have distributed more than six million seedlings to improve and recultivate the farms of our cocoa. Also, we have distributed close to 2 million seedlings for shade trees that actually increase the biodiversity in the farms. I've already talked about child labor. Of course, the best thing for the children is to be in the schools. Therefore, we are working on renovating schools. We are building schools. We've already worked on more than 30 schools, renovation programs, affecting in a positive way more than 5,000 children. Also, infrastructure is very important. Access to water is a real issue in many of those countries. People have to walk for a long time to get fresh water. Therefore, we are working on water supplies. We have improved and built more than 200 boreholes and water supply systems, which are impacting in a positive way about 130,000 community members. So that's an overview of the sustainability achievements since 2008. And with that, I now hand over back to Dieter Weisskopf, who will talk about the outlook 21 and beyond. Thanks a lot for your attention.

Thank you, Martin. And with that, I get to the last part of our presentation. It is the outlook. Now, number one, I have a good reputation information for all shareholders, that is, we will initiate a share back program by June 2021. Now, why can we do that? It is clear the background is our liquidity situation. The balance sheet is not leveraged at all. We have a netto cash position of 250 million by end of 2020. We expect a further high free cash flow in the coming years, and we have an equity ratio of close to 60%. That's the reason that the Board of Directors has decided to start a buyback program for both share classes over a maximum amount of 750 million Swiss francs. The program is expected to start in June 21 until maximum the end of 2022. Now, looking into the performance expectation in the near future. Now, what can you expect from Lyndon Springley in the next years? Now, the good first news is that we have our business model well positioned in a worldwide growing market for premium chocolate, as we have seen the last year. This allows us to focus on our given strategy around innovation, premiumization, and the growth markets. We will clearly continue to invest behind the brand We will clearly roll out our initiatives in the online channels. And, of course, we have ongoing initiatives to further improve profitability and growth in the U.S. Efficiency and cost is clearly a focus that will help us as well to perform well over the next years. Now let's get to the strategic direction. That means not the next one or two years, but looking a little bit more further into 2025 and 2030. Of course, we have made our thoughts and said, you know, how is the environment impacting our targets and as well goals for the longer term? We have looked at that and we have defined a total of six pillars. and these six pillars are looked at in a way that we can put clear objectives and clear projects into each of those six ones. Now, the first one of that six areas is organization. Now, why do we put organization in there? The point is that the group has grown Over the last years, in the meantime, 26 legal units, roughly 13,500 employees. Now, the big issue is how can we guarantee that in a decentralized organization, we are fast, we have employees with skills, entrepreneurship and we make sure that we are going quicker than the market because if you look around, markets and the whole environment is changing. Now if we go into the products and consumers clearly, we have to look What is the digitalization doing in the area of products, in the area of channels, and as well in the area of how to get to the consumer with our message and as well with our advertising? It has changed. It will change further. We have to be prepared. The next area are the channels. If we look at the channel change, one thing we already mentioned is the omnichannel retailing strategy we have started three years ago. We will move forward with that project and at the end of the day, we see a further increase of online sales in the area of the channels. But as well, our own stores, adaptation, depending on the country, our chances we have with own stores, with omnichannel, and clearly as well working together in a better way and more efficiently with our big estimated partners in grocery. Then next is cost and efficiency. If we look at cost efficiency, there must be projects. There are projects in place where we are improving year by year the cost base and as well becoming more efficient in all areas of our processes. Then sustainability we talked about. ESG is a theme, we take it seriously and achieving the goals we will set for 25 and further years need big efforts on our side and as well clear projects. And last but not least, we have the sixth pillar that is geographic expansion. There are still countries where we are underdeveloped. There are countries where we have growing markets and a bigger consumer group that is looking for our premium products. So as well here, we have projects and as well openings of new countries in place. Now let's get to the outlook summary for the short and medium term. We are absolutely convinced that we are well placed for future growths. We have laid in 2020 the base for continued success in the coming years. Giving short and mid-term targets today is, of course, not an easy task in that environment we are in. We therefore give today our outlook under the assumption of a continuously improving pandemic situation over the next months. Having said that, we expect for 2021 sales growth of 6% to 8%. What is higher than our mid-term outlook, thanks to the expectation of some catch-up effect from last year. We as well expect for 2021 an EBIT margin of between 13% and 14%. Looking into 2022, our sales should be back to a mid-long-term gross target of 5% to 7%, and the EBIT margin should reach around 15%. With that, I conclude here our formal presentation, and I hand over to the organizer for the question and answer session.