Vivo Energy plc

Good morning, everyone, and welcome to Vivo Energy's 2020 Interim Results Conference Call. Sadly, we aren't able to do this presentation in person, but for those, dialing in, the slides are available on our website. With me are Christian Chamas, our CEO, and Johan de Prater, our CFO, and we are socially distanced in one room, so hopefully you can avoid any technology issues this morning. I won't talk through the disclaimer on slide one, but I will go through the format of the morning on the next slide. So on slide two, Christian will give a short introduction covering our performance in the last six months and some of the impacts of COVID-19 before Johan goes through the operations and the financials. Christian will then cover our progress against strategy before we head into Q&A from the Lions. With that, I will hand over to Christian to take us through slide three.

Thanks, Giles, and good morning, everyone. We're living in unprecedented times, and I hope that everyone on the line is safe and well. When I last presented our results to you in March, we were optimistic about the future. We had delivered a solid 2019 and had started the year very well, with two months of 20% increases in gross cash profit under our belts. At the time, COVID had barely appeared in Africa, but we had already taken steps to protect our people by banning travel and following WHO guidelines. We will talk through the impacts of COVID in the coming slides, but I'm particularly proud of how our team has reacted at all levels of the organization. We have kept our people and our customers safe while continuing to provide our essential products. I can't stand here and say that the worst is over, as we don't know what lies ahead, but we are cautiously optimistic. We have seen a strong recovery in June, which is continuing in July, from the lows in April, and most of our business is moving back towards normal operations, although remain behind pre-COVID expectations. We have weathered at least the initial storm, helped by our strong balance sheet and continuing resilience of our business. Before we talk about our business, I want to touch on the Moroccan Competition Council, as this is a topic that is a major focus to all. Last week, there was a hearing as part of the process. Despite some media coverage in Morocco, no decisions have been made. The Competition Council will come to their conclusions in due course and we do not have a timetable for that. We maintain that we have always conducted our operations in accordance with the applicable laws and regulations. Moving back to what we control, our response against COVID-19. We have always placed great focus on health and safety and we reacted very quickly to the threat from the pandemic. Whether our staff are in their offices, depots or on site, we have put in place actions to protect them and make sure that the business continues to function in order to serve our customers in a safe and responsible manner. We have also adapted our sites to make them safer for our operations and our customers with increased cleaning standards and distancing to make sure they feel safe when they come to us. We have also invested in our communities across a wide range of projects, with donations to relief funds, provision of fuel, food and medical supplies, as well as utilization of our blending facilities to produce hand sanitizer. Our response has varied by country, reflecting the different needs in each market, but we have consistently made sure that we proactively provided support where it is needed, reflecting our position at the centre of these communities. If we move on... Whilst we haven't yet seen the levels of infections in our countries that we have seen in UK and Europe, we have seen an impact on our business as governments impose strict mobility restrictions in late March and early April to stop the spread of the pandemic. As you see from the left-hand map, nine of our countries had a full lockdown in place in April, with other measures imposed across the rest of the portfolio. As we move through quarter two, there were progressive easing of measures as governments took the balance of health with economics. At the end of June, there was no nationwide lockdowns in place and a number of curfews had been lifted, easing mobility, which in turn has driven a recovery in our volumes. We're not back to full normal yet. Many borders are still closed, and there are targeted lockdowns and restrictions in place in several countries where there have been spikes in cases. But generally, the trend has been positive over the past few months, and you can see on the next slide our month-on-month performance. We have talked to the strong start of the year, held by engine, and then the impact of COVID-19, which you can see on the chart. What is very pleasing is the pace of the recovery as restrictions are lifted, demand has returned very quickly, other than in the aviation sector. As you can see, volumes fell by around 40% in April against the previous year, and unfortunately so did our unit margins, which means the gross cash profit impact was much more significant. As we highlighted in the release, the margin impact was due to the inventory effects linked to COVID impact on the demand and the oil price, which are now through with margins returning to normal levels in June. Before you all get too excited for half two, I will caution you that we remain over 10% below our expected volumes in June and July. Case numbers in many of our markets are rising, and we do not know how governments will react and what impact this will have on our business in H2. However, this chart shows how resilient our business is. I will now hand over to Johan to go through the operations and financials. Thank you.

Thanks, Christian, and good morning, everyone. I hope you're all safe and well. Given the challenges we faced during the period, we delivered a solid result. The strong start to the year supported our performance, with 60% of H1 gross cash profit generated in Q1. As you can see on slide nine, the year-on-year volume and unit margins drop are actually identical at minus 7%. Even in April, when both unit margins and volumes were most impacted, we still broke even at the EBITDA level, which shows how resilient our business is. We talk about our diversification a lot, and it really comes true on the next few slides. Looking at the segments, you can see that retail was our most affected segment, with volumes down 13%, margins down 7%, which meant that gross cash profit fell by $30 million, or just under 20%. The falling volumes was due to restrictions, which disproportionately impacted large retail markets such as Morocco and Tunisia, with the margins primarily reduced by inventory impacts. Part of our NFR business remained resilient as we received rents on our forecourts. But the revenue shares on the large outlets fell due to the need to close many of the restaurants during lockdown or indeed shorter opening hours due to curfews as they weren't considered essential shops. The overall impact was a 20% drop. Moving to the commercial side, we managed to achieve flat year-on-year volumes, which, given the circumstances, is an excellent result. The LPG and mining business offset the impact on the aviation and marine businesses. This was helped by an additional two months from engine. On the margin side, the primary impact was again the inventory revaluation as it was spread across both retail and commercial. Finally, the lubricant segment held up better than the commercial side, with volumes and margins flat on the previous year. Retail lubricants were hard hit as sales on forecourts fell due to less people coming to sites, but our diversification came to the fore again, both in sales through distributors and also to commercial customers such as miners, as well as exports. Page 11 builds further on what I've just said. Our diversification provides real resilience to our performance. You can see that the impacts of the restrictions vary by business line, and this chart shows year-on-year gross cash-it profit changes. The most resilient businesses were less than 5% down year on year, with both commercial fuels and lubricants supported by the strength of sales to mining customers. LPG is sold both in bottles to households for cooking, which is around 80% of the business, with the balance being bulk sales to industry and hospitality. The bulk sales were impacted by lockdowns, but we saw a surge in households consuming bottled gas as more people stayed home, which almost offset the weaker bulk sales and drove the resilience of this business. On the retail side, volumes were impacted heavily in both the deregulated markets and deregulated markets, with unit margins also impacted by the inventory effect. Premium fuels contribution remained relatively stable despite three of the five countries in which we sell the products having full lockdowns in Q2, as improved margins tempered the volume fall. The worst hit business was aviation, with volumes down over 50% in the half and over 80% in Q2 as borders were closed across the continent. This business is slowly recovering as borders open and local flights restart, but will take time before it returns to its previous levels. This is only a smart part of our business and was originally expected to be less than 5% of our gross cash profit in 2020. Looking in more detail at the unit margin on page 12, we have again demonstrated the resilience of this. Even with the unprecedented drop in both demand and the oil price resulting from COVID, our inventory write-downs were limited to around $50 million, or less than 5% of our average inventory holding during H1. Given volumes were lower than normal, this represented around $3 per cube during the period. As Christian shown earlier in the presentation, this was very much a one-off impact and margins have returned to normal levels in June and current July trading. If just the oil price or demand had fallen, then we wouldn't have had this issue and it is not something we would expect to repeat. We also took additional impact on unit margins due to the accounting for the continued hyperinflationary environment in Zimbabwe, which is being treated as a special item. If we were to exclude these two events, margins would have been almost in line with the previous year, even with the lower volumes. Our opening leverage normally works in our favor as we grow our volumes with limited incremental extra costs required for every new liter sold. We also run a very lean business with our adjusted EBITDA to gross cash profit margin, our equivalent of adjusted EBITDA margins, running at almost 60%, plus the cost below gross cash profit being largely fixed. Unfortunately, with the lower volumes, this works against us. And so the lower gross cash profit flows straight to the adjusted EBITDA. And in H1, we had the added impact of two months of additional engine G&A plus increased COVID-related community spending, which compounded the drop. The lower adjusted EBITDA then flows to lower earnings with slightly higher expenses due to the increased use of working capital facilities and a higher effective tax rate due to the function of lower profits and some tax items not linked to P&L such as withholding taxes contributing to the net result. As we sell high value product, movements in working capital have a major impact on our reported cash flow. As reported in March, at the end of 2019, there was $111 million of payments that fell into 2020, benefiting the year-end. But you can now see the opposite effect on HO1 cash flow. If you were to strip this out, we were cash flow neutral at the operating level, even with the lower earnings contribution. We don't normally show the month-on-month movements in working capital, but given the events during the period, we felt it is important to help explain what happened on a monthly basis. You can see this on page 15. As you know, we have a structural negative working capital position driven by a retail business of around 15-day sales. You can see this in January and February, but when demand started falling, you can see the shift and the business moved to a positive working capital position, peaking in April. To address this, we reduced supply and managed our credit exposures carefully. And as volumes recovered, we've seen an improvement in our net working capital, which by the end of the period returned to a negative position. Due to the working capital movements I've just talked through, it was a challenging period for us, and this highlights why we run a conservative balance sheet, which provides the flexibility to get through unforeseen events. We have seen an increase in the net debt to adjusted EBITDA since period end. But the primary impacts on that have been the $111 million of payables that flattered the year end and the $72 million lower adjusted EBITDA in the first half. As you can see, our leverage remains very conservative. We have continued to pay back our amortizing loan, but drew down a portion of our RCF to provide flexibility if it was required, given the high level of COVID uncertainty. Moving on to CAPEX on page 17. With the market environment, we took the decision not to commit new capital, but to continue with projects that were already committed. This meant that CapEx had fallen by around 10% against the previous year. Although as part of our recovery plans, we have continued to make sure we have purchased long lead items for H2 projects. The focus was on growing the network and our offerings whilst making sure we had the most attractive sites in the market. Following the success of Shining Engine, we have also rolled out this program across our shell markets and completed the Shining of over 100 sites, which should provide benefit as we move through the next few months. Finally, we are greatly encouraged at the shape of the recovery we have seen in the business since the April lows. To date, this has continued into July, although volumes remain below original expectations for the period. We are, however, still only weeks into the recovery, and with the rising COVID caseload, it is unclear whether there will be a new measure in post or a delay to the relaxation of measures. Whatever happens, we will be prepared, but it is too soon to reintroduce guidance to the market at this stage. In a similar way, it is regrettable too soon to restart our dividends. However, our business is strong and we recognize the importance of dividends for our investors. If the recovery is maintained, the Board intends to restart dividends in Q3. I would now like to hand back to Christian to complete the presentation. Thank you, Johan.

Our vision is to be the most respected energy company in Africa, and our actions through the pandemic have supported that. We've always run our business to the highest standards, and even with the pressures of the pandemic, we have a reportable injury rate of zero during half one. We're also very clear that we do business the right way, whether relating to our people, our stakeholders, and to the environment. And we always look to the future. And through the second half of the year, we'll do some more work into guiding our ESG strategy and making sure that our reporting reflects what our shareholders need. Our core business is essential to the development of the continent. Without the products we sell, progress would grind to a halt. But we're also expanding what we're doing to play our part and reduce our impact. We have a range of solar initiatives underway on both the retail and commercial side of the business. And we continue to innovate to drive our business forward. I would like to step back and look at the bigger picture before talking about our business. There is a narrative that Africa is going to be consumed by COVID and all its doom and gloom on the continent. This is a simplified narrative. Our governments responded sooner than others and are doing what they can do to manage through the pandemic. Whatever the near-term impacts, we cannot lose sight of the fact that we operate in a series of markets where the macroeconomic drivers remain unchanged by COVID. It has a young and growing population, with an increasing middle class, car park and continuing investment into infrastructure. Our markets are not immune to the current issues, and the IMF is expecting a contraction this year of around 2%. While it is still early to make predictions around 2021, the IMF is expecting a significant recovery next year and that our markets are some of the few around the world that may end 2021 bigger than they started in 2020. And what does this mean for our business? Well, we sell an essential product for which there is no alternative. If you want to get from A to B in Africa, you need fuel. This remains unchanged, and we will do that for many years. As a result of macro tailwinds, we have seen our fuel demand almost double in the last 20 years, and we expect this growth to continue once we are out of the immediate impacts of the pandemic. We have talked about how we managed through the crisis, but I wanted to highlight here that we didn't lose track of our strategy. At the beginning of the year, we set out four key focus areas. Growth in the Shell markets, expanding the engine markets, growing NFR, and utilizing technology. We were making very good progress in the Shell markets at the beginning of the year, and we will look to resume our journey once the impact of COVID falls away. We have, however, continued to grow the network organically with 30 new sites added across the business despite restrictions. We have also increased our market share in the engine countries through acquiring dealer networks in two markets, which will dramatically change our scale in these markets. Those deals are yet to complete, but should add volumes later in the year. On the NFR side, we've also continued to pursue growth, signing another joint venture with KFC, which means we have now six partnerships with KFC. And importantly, we signed our first JV in Tunisia with a leading French brand with ambitious growth plans. Our final focus area was digital innovation. And we have responded to customer needs by trialing ideas such as LPG delivery and cashless payments in a number of markets, as well as a major push in our loyalty programs. Bringing all this together, I wanted to end the day with a couple of slides looking at both the near term and the long term of our opportunities. I want to repeat that our people are the core of our success, and I'm immensely proud of how our teams have reacted. They have been able to flourish due to our operating model, which gives them responsibility whilst holding them accountable and enables the business to react rapidly. We sell products that are critical to our end consumers and our host countries' economies. And our end markets and consumers are highly diverse, which produces added resilience. Not only are we innovating for our customers, but we are utilizing technology increasingly within our business, supported by recent investment in our ERP system and automated sites, which have provided real-time information to enable us to make the right and fast decisions throughout the pandemic. And finally, the prudent way we have run our balance sheet has enabled us to manage through the stresses that we've been placed under and come out the other side strongly. Finally, I wanted to leave with the strength of our business. Our business model remains unchanged and positions us well for future sustainable growth. We have leading market positions with premium brands in markets that have strong underlying growth fundamentals. We are both integrated and diversified, which provides a competitive advantage and resilience to the business. We are focused on growth and have continued to invest during the pandemic to grow our business in order to deliver strong free cash generation in the future. I leave the slide here and hand back to Giles to run the Q&A.

Thanks, Christian. Thanks, Johan. Operator, please open the lines for questions.

We have a question from Alexander Meath from JP Morgan. Your line is open. Please go ahead.

Thank you very much, and good morning. Can I ask three questions, please? My first one just regards the experience that you have with premium fuels, where your chart indicates that perhaps they've outperformed the broader retail fuel segment, despite what you would expect to be perhaps some distress from your customers. So I wonder if you can just comment on that. Secondly, and maybe more for Johan, I wonder if you can comment on the outlook for working capital and the effective tax rate in the second half. And finally, with regards to the inventory revaluation, I had expected that to go below the line. but you've taken it above, and I just wondered if you could explain the rationale there. Thank you.

Okay. Good morning, Alex. The first one on the premium fuels, you know, we ramped up this business for the past three years to bring it to where it is with a strong growth and a strong market share in different countries. I think it's five or six countries. What has happened, okay, we suffered a slump in sales, which is understandable. The margins offered more resilience than the normal retail margins. So that was a good hedge to have. And now with the return of sales in June and July, obviously that brought more value to our bottom line. The margins were pretty good. Johan?

Yes. Good morning, Alex. So on working capital, that we expect to normalize subject to the normal swings that we have in places like Kenya and the OTS, the open tender system for supply. So we don't expect to see the same recurrence as we had in the first half. On the tax rate, the reason the tax rate is so high is because there's quite a few elements which are fixed As you know, when we pay dividends, we pay withholding tax and these items are not linked to the income. And actually, most of the dividends we upstream happens in the first half. So we expect that fixed part to go down as a percentage. So we expect the ETR to clearly drop for the year, but it really will depend on on how the business performs, so we can't really give specific guidance there. On the inventory, you're right, it's a debate, and the reason we decided not to take it as a special item is really a principle. We're in the business of distributing fuel, and this was a very exceptional case, but at the same time, sometimes, You know, you have to take the losses of selling at lower margins than expected. And so rather than, you know, start creating another adjustment at margin basis, because it's really a margin element. We didn't want to create, start playing with adjusted margins. So that's really the main reason for that. And also, you know, the numbers we believe, yes, it's $15 million. It's meaningful, but not really material given the size of our business.

That's very clear. Thank you.

We are now moving to the next question. Nick Coulter from Sishi. Please go ahead.

Hi. Good morning, gentlemen. Three, if I may, please. Firstly, could you talk about the outlook for adding more sites to your network and whether you're seeing any competitor or independent site closures in your market? And then secondly, just to check on the working capital and setting the 110 million aside, I guess you wouldn't expect all of that working capital to come back during the course of the year. I would still expect to see some sort of net negative impact across the year. And then lastly, is it possible to have an indication of the quantum of COVID-19 operating costs that you've incurred so far.

Thank you. On the retail front, we continue our growth story. by opening as many sites as economically possible. And that is what we did even during the lockdown period for the CAPEX that was already committed in January and February and March. And that enabled us to roll out the 30 new sites and the 23 NFRs or QSRs. And that is a continuing story, and we will continue doing that in the coming month. We also have some deals in the new engine countries that will enable us to accelerate that in the sense that we will be taking over some sites from local players in two countries in the coming weeks. And that will ramp up that figure in an accelerated way. Therefore, we remain focused on that growth and that adding on of new sites because it creates enormous value to Vivo Energy. Yes, the competitors are moving, but as we always say, we're a lot more agile than other people, and we move faster.

Thank you.

Hi, Nick. On the working capital, I mean, given the timing elements, it's really difficult to project what it will look like at the end of the year. But as I said to Alex, we believe the structural negative working capital position is there to remain and we don't see any reason not to believe that. Now, how much negative, that's really up to kind of, you know, as I said, the unknowns in places like Kenya that will determine that number and how many tenders we win towards the end of the year. And then the COVID-related costs, I think we had some costs. We had some extra support for the, not for the deals, but for our pump attendants. also for our drivers to make sure that when the recovery came, we were ready to hit the road. We also gave some extra donations to either in terms of fuel or sanitizer and things like that. And Christian can comment on that. But it's not really, I would say, material. And even the sites that we go get to clean, you know, make sure they're clean and hygienic. Again, these are important features. But in terms of costs, They're not really material. I don't know, Christian, are you going to add something?

I mean, we're talking about a couple of million dollars. It doesn't move the needle. When you see the hit on the stock impairment compared to that, it's not in the same league. But it was our duty to do it. We had to support our communities. We had to support our partners. We had to support the people who were key to our delivery from 1st of June of our business. And we had to do that. And we did it. There is no furlough measures in some of these countries. So we became the furlough measure.

I think that that's helpful. Thank you so much.

Thanks, Nick.

Our next question comes from Nick Stefanau from Renaissance Capuchin. Please go ahead, your line is open.

Good morning, gentlemen. Nick Stefanau from Renaissance Capuchin. Thank you for taking my questions. I've got three to ask, if I may. The first one is in regards to the introduction of the dividend. Impressively, you stated that you intend on introducing it later this year, subject to a continuing recovery of the macro conditions. Can you be a bit more specific on that? What I'm trying to get here is when the actual timing is, of that potential announcement and is that dividend going to include the final dividend plus an interim dividend from last year and this interim or is it just going to be the interim? for 2020. That's my first question. The second question is in regards to volumes. I thought that volumes were quite resilient compared to what we were initially afraid in the beginning of COVID. And I think that these recoveries, there was much more closely a V-shaped recovery as opposed to something different. And somehow you're taking a very prudent view here. But could you maybe outline which markets are you worried about, you know, maybe a second wave of lockdowns? And what is it basically that you're mostly worried about in Africa there? And then finally, I've got a question in regards to lubricants. I saw that marches stayed quite flat. I guess this probably reflects their long inventory life and also the pricing of the product, but doesn't really move around with prices. Can you give us a sense of how those marches might evolve in the second half? Should I be thinking a big increase in those marches just because you're going to keep the same retail price, but you're going to have a much lower feedstock? These are my questions. Thank you.

Hey, Nick, good morning. So on the dividend, really, it's still too early, and that's why we have to really look at the recovery of the business. So we'll do our trading update in October and then reassess of where we are from a business perspective and both look at, as you said, the interim dividend and the 2019 dividend. But that's all I can say at this point in time. Okay.

Just in general on the market, you know, when you see in January and February, we were doing very well and we had fantastic two months, right? The beginning of March was looking similar. And of course, then when the lockdown started to appear from middle of March, the whole thing went towards what you know. But what is clear is that we were seriously hit in April and May with significant drops of our business or sales in these two months. But what is also pleasing to see is that the recovery was very quick because the demand is there. And we were able to come back to the limelight, to the front of the scene with a very good performance in June and it's continuing in July. What is important that everybody understands takes away, is that these are early days. We cannot be too optimistic. That's why we say we're cautiously optimistic. If August confirms, September confirms, as Johan was saying, we'll come back in October and we will communicate on issues like dividends or whatever linked to 2019 or 2020. All we can hope is that COVID is behind us, but There are some signs that force us to be prudent. What is good is that we were able to react rapidly in both circumstances. When things went bad, we reacted in a good way. And when lockdowns were lifted, we reacted very quick. And we keep that in place. Our teams are ready, and they will behave in that manner again, if necessary. Once, twice, three times. But we're not out of the woods, as they say.

And then your third question on the margin, you know, it really goes, you know, market by market and, you know, month to month. So we and especially what we are questioning is only in deregulated retail markets, which only, you know, are three, Morocco, Ghana and Uganda. We also have an election in Ghana coming up. So that always tends to. to put more pressure on the pump prices as well. So it's really difficult to give clear projections. So we actually overall, and we don't guide anymore for retail margins, but overall we believe that, you know, we're back into the high 60s, low 70s zone for our unit margin. And we believe, you know, nothing really is on the horizon, not to stick to those numbers. And the $15 million or the $5 or the $3, sorry, that we saw in the first half, We don't expect that to be repeated anytime soon.

No, I was talking specifically about lubricants.

Lubricants, sorry. Yes. So lubricants, there's quite a long lead time, especially the blending plants that we have in Morocco, Kenya. Yeah, the stocks. And so it takes time. And then we've seen quite resilient margins, as you say, that was year on year flat, but And then again, it's driven by competitive pricing as well, because some of the markets might have some currency depreciation as well. So we, again, I think there's no expectation to see that margin significantly go up or down in the next six months.

Okay, fair enough. And so, just a quick follow-up. Which markets... uh right now are you mostly concerned but uh you know there might be another um another wave of lockdowns um specifically just just to get an idea of um of the impact um yeah well we we follow like you uh like everybody else on a daily basis what is happening in our different markets and and the

When the lockdowns are decided, they're not decided by us, but decided by governments. And we automatically and immediately take the necessary measures to protect ourselves, to protect our teams, to protect our clients through the necessary business continuity measures. So I can't tell you this one is red or this one is green or this one is yellow. It comes and goes as quickly as you know. as it came and went. It's coming back in certain places, pockets here and there, as you can see in Spain or in France or in Belgium or in Germany. So we are not immune from similarity and we have to live through it and come back, come out strong. And that is what we're planning for.

Thank you. Thanks, Nick.

Does he mind it? If you wish to ask a question, please press star 1 on your telephone keypad. We now have a question from George Pila Koushas from Numis. Please go ahead.

Hi, morning team. The first one was just if you could provide any commentary on some of your larger geographies. If we just look at the revenue split, Kenya seems to be much more resilient whereas kind of Morocco was kind of impacted a bit more. So if you could give a bit of a sense how that trended through the period and how it's looking kind of coming into June, July. Then a comment on Engen. We've kind of had this business as part of the group for now for over 12 months. I guess if you could just comment on how you think that integration has gone, how you're kind of progressing with synergies, how you feel about how that acquisition has gone over the past 12 months. And then finally, you mentioned a couple of acquisitions of dealer networks and the engine markets. Is there anything else you can provide there in terms of the size of the networks, perhaps?

Yes. Hey, George. Good morning. Actually, the revenues in the financial statements are not misleading, but one, there's the impact of the oil price, which you can see. But also, in the first part of the first half, we won quite a few tenders in Kenya. And under AFRS, when we win these industry tenders, we recognize the full revenue. So that's why actually Kenya is now the largest country in terms of revenue because of those tenders. But we actually don't make any margin on that. It's just the way the industry is structured. So maybe, Christian, on engine integration?

The engine integration is going very well. The countries that were a question mark because of the environment, and I don't need to mention them, you know them as well as I do, these countries are turning out to be positive in the sense that we see volume growth. COVID or no COVID, we see margin growth and we see result growth. So that's very pleasing. And we've had no nasty surprises as such in the last year or so. And we're very bullish. And as we said earlier on, there are opportunities now in two countries where we'll be able to acquire quite a few retail sites from local operators. And that will enhance our market share and our sales in these two countries where we were particularly low in market share in retail. So, no, very bullish about this acquisition. And we'll continue growing it like we did when we acquired the Shell portfolio.

Great. Thank you very much.

There are no further questions at this time. We have just now a question from Nick Stefanaou from Renaissance Capuchon.

Hi guys, sorry for dialing in again. I had a question in regards to those side shinings. You mentioned you're doing in the Shell markets, which I believe started off in the engine markets. Keep a bit more background on that. So what exactly are you improving there? And do you think that that will actually is something that will increase throughput in your view in those sites? Thanks.

Okay, good question. We started by doing engine shining because when we took over the engine portfolio of sites, they were a bit, they needed tender loving care, I'll use a diplomatic word, and that's what we embarked on from day one. And we therefore gave them what I would call a better look so that it becomes more attractive to our customers. and the people who use our focus, be it on the aesthetical side or even on the content side, the shops and all that, to make sure that the whole package looks better and more attractive. And we also worked on our customer champions, our pump attendants, to make sure they're retrained so they offer the right service. service to people who come on board the lubricants was also attended to and we did the same thing with all these different shops and food offerings so that was done is successful because we don't do these operations without a return right everything has a cost and it has to have a return and And the return on retail side is of course an increase in average throughput. And we saw it in the engine side and it is there and therefore it's bringing profitability to the company. We decided to do the same thing on the shell side because we were private at the time but when we took over the shell side in early 2012 or late 2011, There was a shining shell operation that was done in the first year, which was 2012, in order to give them a refreshed look. That was done, and that was 2012. So although we kept them tidy, quite a few of them looked a bit tired by the time we get to the end of 2019 or middle of 2019. So we used the opportunity of the engine shining to do shell shinings. And that has also proved successful. I think we have already done 100, if I'm not mistaken, since the beginning of the year on the shelf front. So that's, again, bringing what I would call an increased average throughput and a return to us, of course. Does that answer your question?

Got it. It does.

Thank you.

I guess it's more of a case that we're not able to see the results yet because of COVID. Yeah, unfortunately.

Yeah.

Yeah, okay.

All right. Thank you so much. It reduces the COVID impact because when you come back to business as usual or normal from the 1st of June, the average unit throughput that will increase and will bring you more value than if you hadn't done it.

Got it. Yeah. Thank you. Thank you so much.

There are no further questions in the queue.

Great. Thank you very much, operator, and thank you, everyone, for dialing in and asking the questions, and look forward to catching up with you soon. I hope you all stay safe and well. Thanks.

Thank you very much. Bye-bye.

Thank you. Bye-bye.