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Edited Transcript of GCL.MI earnings conference call or presentation 12-Mar-20 5:00pm GMT

Full Year 2019 Guala Closures SpA Earnings Call

Jun 8, 2020 (Thomson StreetEvents) -- Edited Transcript of Guala Closures SpA earnings conference call or presentation Thursday, March 12, 2020 at 5:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Alessandro Baj Badino

Guala Closures S.p.A. - Head of IR

* Anibal Diaz Diaz

Guala Closures S.p.A. - CFO & Director

* Claudia Ilaria Banfi

Guala Closures S.p.A. - Group Finance & Administrative Director

* Francesco Bove

Guala Closures S.p.A. - COO & Director

* Marco Giovannini

Guala Closures S.p.A. - Chairman & CEO

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Conference Call Participants

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* Enrico Antonio Coco

Intermonte SIM S.p.A., Research Division - Research Analyst

* Felix Eisel

Conduction Capital Advisers - Founder and Partner

* Gianmarco Bonacina

Equita SIM S.p.A., Research Division - European Equity Research Manager

* Niccolò Guido Storer

Kepler Cheuvreux, Research Division - Equity Research Analyst

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Presentation

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Operator [1]

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Welcome, and thank you for standing by. (Operator Instructions) The call is being recorded.

Now I will turn the meeting over to your host, Marco Giovannini, you may begin.

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Marco Giovannini, Guala Closures S.p.A. - Chairman & CEO [2]

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Thanks. Good evening, all of you, ladies and gentlemen, and personally, I hope and I wish you all the best possible health for you, your relatives and your colleagues in this challenging environment.

Anyway, let's go on talking about the Guala Closures Full Year 2019 Results in cooperation with our Chief Financial Officer, as usual, Anibal Diaz; Franco Bove, our COO; Claudia Banfi, Group Finance and Administrative Director; and Alessandro Badino, our Group Investor Relations.

Let me start now. Following the presentation that you have in your hand, by giving you some perspective on the business of our fourth quarter and full year. The main achievements has some important trends we saw emerging in the same period. Fourth quarter 2019 confirmed the positive business momentum registered in the 9 months -- first 9 months 2019, and I would still emphasize extremely the resiliency of our diversified business, both in terms of geographies, clients and product.

In full year 2019, we'll be able to tackle exceptional events, as I explained in my comments on the press release, like trade wars, almost all over the world; social turmoil, Europe, America; and climate changes, Africa, Oceana.

In 2019, we posted a substantial revenue growth registered in an increase of 11.7% at current FX, and up 3.3% on an organic basis, which is in line with our long-term growth of between 3% and 5%. More important, the full year '19 adjusted EBITDA margin at current perimeter that means excluding UCP and FX, reached 19.7%, up 40 basis points versus last year. Net profit after minorities reached almost EUR 50 million. And lastly, in terms of cash generation, our operating cash flow increased by 80% at EUR 87 million, showing an important group cash generation and deleverage.

As far as the business now, as you can see on Page 5, in fourth quarter, we launched 3 major new closures. This is our DNA normally, one for spirits. They have been launched by Pernod Ricard, combined French caviar and Polish vodka bottle and 2 for wines, mainly in the Russian segment.

In Page 6, there is a list of product institutional awards received during the fourth quarter. And let me just spend a few words on the WorldStar Packaging Awards 2020. Normally, this is the third annual award that we received after having won the Alufoil Trophy in the SIMEI Innovation Challenge for the connected closure, of our NeSTGATE range, which allows each bottle of wine spills olive oil to become a connected packaging. This award was given to e-WAK, the first aluminum wine closure with integrated NFC technology, which allows wineries to establish an individual relationship with end consumers. And if you remember, we first launched in California. The competition took place in Bali, Indonesia in November, a representative of 36 Packaging Association, members of WPO organization, judged 320 wine packaging projects from 36 accounts, and we won.

Let's now move to Slide 7. In December 2019, in our head office in Spinetta Marengo, took place the inauguration ceremony for a new trigeneration plant built by E.ON. The plant will supply 75% of the plant's electricity, and 90% of it is thermal energy, with the objective of capping energy costs and reducing its environmental impact to mixing the reduction of emissions of around 328 tons of CO2 every year. This initiative reinforced the Guala Group commitment to sustainable development. I want just to draw your attention that we started from 2011, not just 1 or 2 years ago. Guala Closures started an environmental sustainability report, certified by third-party. But not only, the group is always committed with reforestation programs, and that today, these reforestation programs have led to planting over 300,000 trees in India, Mexico, Malaysia to compensate over 180,000 tons of CO2. We strongly believe in the environment since a lot of time.

Now I think, for your knowledge, few words on UCP acquisition executed in December 2018. At time of announcement, we declared that the integration process of UCP into Guala Closures Group should focus on 2 different objectives: extending the group's product range; and boosting production capacity in the United Kingdom. More specifically, these targets should be reached by merging the raw material portion -- department, bring the UCP's production processes in line with our wines in Guala Closures Group, and rationalizing their organization structure. Although we found a series of unaffected problems to -- due to severe lack of maintenance in the past. In full year 2019, we exceeded the annual cost synergies target of GBP 0.5 million, given at the time of the acquisition.

Then Kenya, on 4th of November, was officially inaugurated our new East Africa site in Nairobi. And after having established the company in November 2018, production started in February. And after the excellent results of the -- they obtained at the end of first quarter 2019, in August, we decided to double the production capacity. I want to stress the point that the Nairobi operation includes state-of-the-art manufacturer and equipment, and not second-hand material at all. Most of which is Italian designer and manufacturer. And what is going to be even more important for the future, the whole workforce has been framed by Industry 4.0 method using remote simulators.

Also in November 2019, we opened a new production facility in Belarus to better serve the local and Russian market. At the beginning of September, we established the company. And in early November, production starts with 4 assembly lines. Personally, I would like to express all my gratitude and appreciation to my team, as they were able to execute the whole project in a very short time, allowing Guala Closures to take full advantage of market opportunity in order to increase business and profitability.

Then on corporate events, I would like to spend a few words on the acquisition of Closurelogic assets and the strategic partnership signed with SharpEnd. So for you, let's move to Slide #8 now. The acquisition of Closurelogic give us a significant share in the German market, where our presence in terms of mineral water has been marginal as of today. We are also becoming a major player in the glass bottle beverage in mineral water market. And on top, this reserve capacity for future growth in the sector. Thanks to 2 drivers of sustainability premiumization, the glass bottle market is confidently projected to record strong growth in the next period.

The transaction, which follows insolvency proceedings, include the acquisition of Closurelogic's tangible and intangible assets, including the property in Worms, South of Frankfurt, for a total value of EUR 7.2 million. As you can see, the acquisition was finalized at very interesting and low mostly. The deal structure guarantees Guala Closures the versatility of acquiring only the assets of Closurelogic without taking onboard any liability generated by the previous management. For 2020, we are already implementing major industrial efficiency plan, and the positive margin should be achieved.

Slide 9. From 24th of February, Guala Closures and SharpEnd signed a strategic partnership to set up a new direction in the packaging industry by transforming closure into valuable media touch points for consumer engagement, that acquisition and supply chain management.

GCL develop unparalleled tech competencies in the IoT packaging, hardware manufacturing, enabled the production of uniquely patented NFC-integrated closure at scale. Guala Closures investment to SharpEnd follows our intent to provide turnkey solutions to our customers, by becoming a technological integrator for connected packaging solution that could be applied even in parallel segments on top of the wine and spirits parts.

The deal consists of the initial acquisition of 20% of SharpEnd share through a carrier increase for a limited amount. Potential further capital injections in the company are planned provided predefined financial operation milestones are met by SharpEnd in the coming years.

Now the last, Guala Closures will remain a minority investor, while Cameron Worth, SharpEnd's founder and current sole shareholder, will retain the majority of the company's shares.

Now having said that, I'd like to hand over to Anibal, for his review of our 9-month financial performance and 12-month financial performance. And I'll follow-up with some conclusion, before taking your questions. Thanks for the moment.

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Anibal Diaz Diaz, Guala Closures S.p.A. - CFO & Director [3]

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Thank you, Marco. Let me start from Slide 11, giving you some highlights on fourth quarter results. As Marco said, we delivered a solid set of numbers.

Group revenues were up 8.5% at current FX, while organic growth was plus 2.3%, higher than in the third quarter 2019 result. The increase in group adjusted EBITDA was 10.4%, higher than the group revenues growth. At a constant perimeter, EBITDA increase was 8.1%, reaching a margin of 22.7% versus 21.4% of last year in the same period of time, posting an uplift of 130 basis points.

On the next slide, there are some highlights on full year 2019 numbers. Revenues posted a substantial growth, registering an increase of 11.7% at current FX, and up 3.3% on an organic base, which is in the line with our long-term growth of 3% to 5%.

As we saw in the fourth quarter, full year 2019 adjusted EBITDA margin at constant perimeter and current FX, was up 40 basis points versus last year, reaching a 19.7% margin for the 12 months.

Let's now move to Slide 13, focusing on net profit. Net profit after minorities reached of almost EUR 50 million versus EUR 100,000 for the full year 2018. The increase in net profit is mainly due to the improvement of EBITDA and the reduction in net financial expenses and income taxes, partially compensated by increase in depreciation and amortization, which includes the PPA impact for the full year.

Moving to Slide 14. The net financial position at the end of the year 2018 was 462.5 decrease in versus 476.5 at the beginning of 2019, thanks to our cash flow generation of EUR 40 million.

Now allow me to underline the EUR 67 million of cash flow improvement versus last year. As you can see from the bottom of the slide, these results is due to robust growth in operating cash flow at almost EUR 87 million, which increased around 80% versus last year. A further improvement in cash flow was reached through a decrease both in the investment on financing outflows for around EUR 60 million and EUR 12 million, respectively. The strong increase in the operating cash flow was mostly obtained through an increase in EBITDA and optimization policies put in place by margin on the working capital, together with lower cash-out from other operating activities and taxes. Instead, the lower cash-out from investing activities was obtained through a slightly lower CapEx and no acquisition executed in the period.

Finally, the improvement in finance and cash flow was mainly due to the nonreplicable amount posted in 2018 related to the business combination and refinancing for a total of around EUR 24 million.

Moving to Slide 15. Here, we have the details on the net revenues evolution. The 3.1% organic growth was achieved through an almost balanced increase of both volumes and price. The main drivers of the volume increase are in America, and specifically in Mexico. Thanks to the significant increase recorded in the markets of safety closure for tequila. And in Chile, in wine roll-ons and in -- wine roll-ons. In Europe, in particular, in Poland and the U.K., the roll-on and luxury segments, and in Spain, the water segment.

On prices, up EUR 10.1 million. This was obtained, thanks to the ability of our salespeople to renegotiate prices with our clients, even in a situation where the raw materials were decreasing. The consolidation of UCP for EUR 45.4 million, bringing us to a total revenue of EUR 605.3 million, registering a 11.4% increase in group net sales at constant rates, or 11.7% at current FX. The positive translation impact is mostly coming from the revaluation of the Ukrainian Hryvnia, India, U.S. dollar and Mexico, partially offset, as you know, by the Argentinian pesos.

Going to the evolution in Slide 16, going to the evolution of net sales by geography, Slide #16. The strongest absolute increase was registered in Europe, thanks to the positive contribution from UCP acquisition, and from higher sales in the U.K. in Glasbury and in Italy and Spain, in the water segment. In Americas, as I said before, Mexico and North America were the main drivers of sales growth, was the increase of luxury closures in the tequila market and safety.

Asia is showing a negative performance, but mainly is due to the contraction of the domestic market registered in China, and the start-up of our operation in Kenya, to which part of the Indian business was transferred. Consequently, in Africa, revenues were positively impacted from the ramp-up of our Kenyan operation, allowing us to offset the difficulties we have in the South African market.

Moving to the evolution of revenues by product. Specialty the closures, Safety and Luxury, registered an increase of almost EUR 33 million, and were the best product performance. Specifically, Safety posted a year-on-year growth of 10.4% at constant FX, thanks to sales in the Mexican tequila and to the growth recorded in the U.K., as well as the conclusion of the newly acquired Guala Closures UCP.

Luxury products posted a 39% growth at constant FX, thanks to recent investments made in the U.K. and Mexico and North America. Wine is registering an increase of 8.6% at constant FX, benefiting from the constant shift from core to aluminum caps, and specifically in Chile, Poland, Spain and Italy. Roll-on posted an 18.2% growth at constant rate, mainly thanks to Italy, following the investment made in the mineral water segment and the consolidation of UCP.

Moving to Slide 17. There's a bridge on the EBITDA, selling price increase and positive impact from raw materials, more than offset the negative impact registered in mix and other cost barriers. I remember you that, as I said before, we were able to increase the prices in a period of time where the raw materials were reducing. But remember that we said in last quarter last year, that because of the increase in energy and other costs was pushing up to increase the price even when the raw material was reduced. The growth in EBITDA of 4.1% year-on-year. Again, we are showing you the ability of our Guala Closures to increase the prices even if the raw materials are stable or slightly declined.

The main negative items of mix and other cost barriers are higher personnel costs due to the inflation and accrual of the long-term incentive plan, increase in utilities and transport, and an impact from production, reorganization and the start-up, and additional cost to reinforce the group structure for being listed. Remember that in 2019 we started 2 factories, 1 in Kenya and 1 in Belarus. And of course, the start-up of these factories is giving us a higher cost in the period. Including the positive effect from the UCP acquisition for EUR 2.5 million and the marginal impact from FX, the adjusted EBITDA increased 8.6% at EUR 113.5 million

Moving to Slide 18. The full year 2019 CapEx reached EUR 35.4 million, slightly lower than last year. We decided to provide more color on the split, highlighting the investment made in NFC, which are part of the total growth CapEx. Maintenance CapEx is now composed by maintenance and environmental, health, safety and sustainability. The split between total maintenance and growth CapEx is equal. Most of the CapEx has been spent in Europe, and specifically, in Italy, Ukraine, Belorussia, and U.K. mostly on the UCP plant. Also in India and East Africa, relevant investments were undertaken for the enlargement of the action plan in -- of the action plan. Also, we have in Nairobi for the opening of -- and doubling the capacity in the factory in Kenya.

Let's now move to Slide 19. Well, we have the net working capital. In terms of days, the improvement initiatives put in place by the management are showing that in comparable situation, we end up with 4 days less of total net working capital. At the end of December, we were 73 days of sales versus 77 in the same period in 2019. This result was obtained mainly due to a reduction in days of sales in receivables, while we maintain the inventory days in line with last year.

In terms of value, although group sales increased more than EUR 50 million, the value of the net working capital was only -- was up only by around EUR 3 million. Furthermore, at the end of 2019, structuring was in line with the end of last year.

Going to Slide 20. This slide is a comparison between full year 2019 and full year 2018, highlighting the difference in detail. As you can see, this year, we registered an improvement in all the components of the free cash flow from the operating activities, excluding the extraordinary, which increased from EUR 64 million last year to more than EUR 94 million this year.

As a consequence, also the free cash flow before dividends, M&A and extraordinary grew substantially with an improvement of around EUR 30 million, also benefiting from the refinancing executed last year in terms of lower interest rates.

And finally, in full year 2019, the cash absorption has a total improvement of EUR 67 million since in 2018. The result of the business combination and the refinancing negatively impacted from more than EUR 24 million.

Let's move now to the next slide. The net financial debt evolution. This is a summary of what I previously mentioned. We started the year with the net financial position of EUR 476.5 million due to the restatement of the adoption of IFRS 16 on the PPA, and the revaluation on the liabilities for the production of the noncontrolling minorities. The cash generation for the period was EUR 14 million, and we finished with a net debt at the end of the year of EUR 462.5 million.

I would like to hand over to Marco now for some closing remarks and outlook. Thank you.

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Marco Giovannini, Guala Closures S.p.A. - Chairman & CEO [4]

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Thanks, Anibal. First of all, I think that we need to -- as usual, be focused on the basics. So now -- the basics of the business. And we already demonstrated in the past that we are a very resilient company, neither financial crisis nor raw material crisis have been impacted in the medium term, our company. So all our people are focusing on basics, and basics 100% for the time being and for the season.

So I will say that, I think, that we have a few points to focus on. First one is still going on with our manufacturing job in UCP, where after having exceeded the annual cost synergies of GBP 0.5 million in full year '19, we will continue in its consolidation and integration in our group, and the target is to reach for the annual cost around GBP 0.2 million, GBP 0.3 million just in manufacturing in order to reach a total and exceed GBP 0.7 million.

On Closurelogic, we are already implementing a major industrial efficiency plan, including the printing shops, which have been stopped for more than the demand, and we are trying to restart by the first half 2020. The financial target is to post a positive margin in 2020 after a loss of over EUR 3 million posted in 2019 at EBITDA level.

On our core business, we are committed to faster growth in Safety and Luxury closures, on top of the double-digit increase registering in full year '19.

With regards -- finally, the NFC Connected Closure after the 2 successful agreements with Malibu and Böen in 2019, beginning on 2020. Two new agreements have been signed and products are already available on the shelf. On January, Vigneti Massa, an Italian top-quality wine maker, launched the first connector wine bottles in Europe that keep with our NeSTGATE technology. Thanks to the collaboration between Guala Closures and Compellio, the Luxembourg base of their company, customers who choose Vigneti Massa, who created their own virtual cellar, based on the Compellio line platform, providing them with information on the areas of wine growing, on the vineyards, on the vine, the tasting notes and expert reviews. In addition, what for me is even more important for other appreciation, the consumer will have the opportunity to verify the certification of the authenticity of the product, thanks to the blockchain technology. This commercial closure are linked to the blockchain platform that provides a unique identification code for each bottle. This enables Vigneti Massa to protect sensitive data and monitor data real time, providing effective support for the flexibility of the product alongside the supply chain.

Furthermore, beginning in February, the famous whiskey brand Jameson announced the 8th limited edition bottles celebrating St. Patrick's Day with our NFC technology and QR code on the neck of the bottle.

We believe our strategic partners with SharpEnd that will speed up the adoption process and the penetration of our connected factors installations.

Last but not the least, few words on shareholder remuneration. Given the financial market current situation, and if we do have the reserves to distribute a reasonable dividend, the Board of Directors has decided to take a prudent approach and to utilize the entire free cash flow generated in the full year '19 to deleverage.

Now to present you with a strategic questions from our side, I think we need to take a look -- talk a little bit about the coronavirus update. On Slide 24, you can check that since February 22, all our Italian plants have adopted all measures available to manage a reasonable situation. As of today, all our sites, including those based in Italy, are operational, both for the procurement of raw materials and for the supply of finished products. So we have not yet stopped any production line for the time being.

In terms of closer production, in most cases, we can count on outsourcing, and we have established a crisis production team to protect the guarantee to supply to clients where a dual source is not available. Our geographical spread, the diversified clients, possible growth in consumption of local markets, while the product portfolio and various sources of raw material will enable us to mitigate, I'm sure, the negative effects. Although it's premature today to quantify any potential impact.

Thank you. And now, operator, we're ready to take your questions. Thanks.

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Questions and Answers

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Operator [1]

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(Operator Instructions) We have one question in queue, speakers. It's from Gianmarco.

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Gianmarco Bonacina, Equita SIM S.p.A., Research Division - European Equity Research Manager [2]

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It's Gianmarco Bonacina from Equita. A couple of questions. The first one is about this acquisition you announced of Closurelogic. If I understand, this is a business that had EUR 45 million in sales last year. If you can maybe elaborate on why last year the business recorded a decline in the top line? And also moved from a positive margin to a negative margin? And why you are so confident that you can return to positive EBITDA?

And the second question is more broadly for the full year 2020. If you can provide some indication in terms of guidance, both on the top line and EBITDA?

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Anibal Diaz Diaz, Guala Closures S.p.A. - CFO & Director [3]

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Okay. Let me -- about the 2019, Closurelogic. For the British-based people, this is going to be easier to understand. This company went into travels because of the pension fund. The pension fund in Germany are different to Italy or the U.K. is still allowed to have inside the company. So this company arrived to have a pension fund of around EUR 29 million to EUR 30 million inside the company, and they needed to start to pay to the pensioners the pensions. So they brought the company into difficulties, nothing to do with the market, but mainly due that the cash outs that they need to give to the workers -- to the pensions were more than what the company could generate. We bought in a bankruptcy process, so Guala Closures is not a company in Germany, is not entitled anymore to pay any liability coming from the past on the pensions. And we started a new situation since the day we bought the company. So in this case, and by the way, the pensioners, they get all their pensions and their deferred pensions because of German administration, and they have a solidarity fund at national level to pay these cases that is not in other countries.

About the improvement in the EBITDA, as Marco said before, due to all these difficulties they were trying to ship the printing from Germany into Spain and doing everything they were. Remember that the -- for example, they needed to pay their raw materials cash, because they do not have any more credit. And what we are forecasting is to bring the company to the level of what we do normally with the mineral water closures in a period of, let's say...

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Marco Giovannini, Guala Closures S.p.A. - Chairman & CEO [4]

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2022?

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Anibal Diaz Diaz, Guala Closures S.p.A. - CFO & Director [5]

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Yes. 2 years.

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Marco Giovannini, Guala Closures S.p.A. - Chairman & CEO [6]

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In 2 years, yes.

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Anibal Diaz Diaz, Guala Closures S.p.A. - CFO & Director [7]

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Okay. About the 2020, I think -- as a general comment, we are not giving the guidance as we did last year. Today, as Marco said already, we took all the actions. First of all, to protect the health of our people in Italy; and second, we are confident that we can supply our customers on time. And the first situation of covering the geographical spread we have is that we can supply the customers from more than 1 plant in general. And second, that the raw materials, we are also searching from different places, so we can -- we are confident that we do not have problems in this sense. About the guidance, the -- I don't know, Badino, if you can go ahead? Yes?

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Alessandro Baj Badino, Guala Closures S.p.A. - Head of IR [8]

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For the time being, as you know, as we did last year, we decided to not provide any guidance. And so we can go on with the second question. Operator, please?

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Operator [9]

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Now we have the next question we have from Nicolas (sic) [Niccolò].

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Niccolò Guido Storer, Kepler Cheuvreux, Research Division - Equity Research Analyst [10]

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Yes. Storer from Kepler. I have 2 questions. The first one on your investment in the SharpEnd. I was wondering what this acquisition could bring about considering that you already have a good technology on NFC?

And the second one is on volume mix impact on EBITDA. I see that it's, again, negative. If you can comment on that? On why the mix, I assume, is that negative?

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Marco Giovannini, Guala Closures S.p.A. - Chairman & CEO [11]

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Okay. Marco speaking. On the first question, yes, you are right. In the sense that up today, we are the only one, let's say, hardware producer with a very high reliability. I insist on this concept to put the microchip on RFID on a surface, whatever it is, label, bottle, a carton, computer, smart phone, it's very easy. What is missing there, several times is the reliability, as all these kind of stuff could be easily damaged in the normal use, in the transportation, packaging or whatever. But if you take an iceberg, and unfortunately, I cannot draw on a white board, they're not by phone. But when I explain the strategy even to the Board and over to my team at the beginning, 5 years ago. I think that we put drawing with an iceberg. Normally, everybody is seeing the point of the iceberg. And the point of the iceberg is the consumer engagement. What is received outside the closure of a bottle, a label or whatever? Our technology is not the point of the iceberg. Our technology is the base, the low base of the iceberg. That means we manufacture the tons of tons of hardware that means that they could diversify the packaging into a connected package. So when we approach a customer, now we share plan, we're able to immediately provide the solution, able to touch the consumer. It could reach consumers effectively.

On top, working with competitor like, Luxembourg now we are developing, what is the blockchain database that is the guarantee for the consumer that they are protected against the counterfeiting but this is not normally our job. We are not a software company, and we do know they are honest, we're now being a manufacturing industrial company, the flexibility to provide single solution to everybody. We're doing the base of the iceberg and the top point of the iceberg. There are still a further step. It means the full control of the supply chain, and that's, again, another totally different job, that for the future, personally, I feel is the most important one. As the real guarantee to everybody from consumer to distributor, to freight company to investors, to the stakeholders, is the full trustability for every group. Today, this is missing in the several application, I mean almost in all the application, almost in all the application, for 2 reasons: first, the complexity of doing that from a software point of view, from the sensor point of view, that means to combine the hardware and software is quite challenging. And then for the reason why sometimes it's by far easier to put by hands, so that's by an automatic process.

So working with SharpEnd until now, we are discovering that we could apply our hardware, let's call, the NFC technology like that there, even to other application as the system could be reciprocate. I'm not saying that we should do the more money as a -- it's not a matter of money, by the way. It's a matter of human resources and a matter of providing, again, a reliable system with -- combined the 2 expertise, we could boost our penetration and the connected patch -- package. Still, I emphasize trying to design, I think, to when we say first and design what will be the middle of the iceberg. We are at a very early stage here for the time being with that. But we already have got some positive responses from some key customers about that. We have to do step by step, but we feel very, very well. So I hope that with the iceberg example, it is a little bit clearer now.

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Anibal Diaz Diaz, Guala Closures S.p.A. - CFO & Director [12]

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The second question, probably Franco will...

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Marco Giovannini, Guala Closures S.p.A. - Chairman & CEO [13]

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Franco, you will answer -- you answer the second space.

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Francesco Bove, Guala Closures S.p.A. - COO & Director [14]

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Yes. The second question is on the negative volume mix. Basically, that's a result of a lower type of mix in terms of growth, okay? What's been growing -- I mean we've had some interesting growth on the water closures that we mentioned before, and we've had the good growth on other roll-ons and wine, right? So basically, it's coming from the fact that, in this case, we've had a little bit of a more negative mix, because the growth has been more in the lower-margin closures, right? However, it's been totally compensated by the price variance that you've seen before.

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Operator [15]

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Our next question is coming from [Sinon]

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Unidentified Analyst, [16]

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A couple of questions. Do you have a guidance for your CapEx for 2020?

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Marco Giovannini, Guala Closures S.p.A. - Chairman & CEO [17]

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Yes.

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Claudia Ilaria Banfi, Guala Closures S.p.A. - Group Finance & Administrative Director [18]

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In general, yes -- general CapEx for 2020, and in general, on overall basis, so you can consider between 5.5% and 6.5% of revenue.

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Unidentified Analyst, [19]

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And you said that from this year on, you decided not to give any outlook on revenues and EBITDA. I'm sorry if I missed it. Is this a decision you took because of the uncertainty in the markets or this was a general strategy change?

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Francesco Bove, Guala Closures S.p.A. - COO & Director [20]

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No. I mean if you follow us in the past, also last year, we didn't provide any guidance on full year 2019. So it's perfectly in line with the company's history.

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Unidentified Analyst, [21]

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Okay. And on -- thank you for the details you gave on the virus situation. I understand that you are confident that you can supply your customers from different sites, and also you have several suppliers when it comes to your operations. But especially in Italy, currently, are you running the plants full time? Or you had to take production cuts because of the lockdown in the country?

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Alessandro Baj Badino, Guala Closures S.p.A. - Head of IR [22]

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I'll answer that, Franco. Yes, we are confident because so far, we have had no curbing on production of -- on any of the 4 factories that we have in Italy so far. So far, we have no real concerns yet about the supply of the raw material. It's coming in regularly. We are not concerned yet about any restriction on transport because the government decree has allowed the fact that all transportation will not be touched by the measures. Okay? And it is also official with the last measures that were announced last night that no factory -- production factories are impacted by the measures. They can continue to produce. And so far, we have our customers both in Italy and outside who are continuing to demand. In fact, we have some customers on our side, for obvious reasons, who are asking for more, in some cases, which we are managing to supply at the moment. So far, with all the measures we have taken, we've got all of our 4 factories in Italy fully operating.

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Unidentified Analyst, [23]

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Fully operating. That's very helpful. So it seems like, at least so far, your operations have not been impacted from virus, or they will not have any financial impact on your numbers at least so far.

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Alessandro Baj Badino, Guala Closures S.p.A. - Head of IR [24]

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Not at all until now.

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Marco Giovannini, Guala Closures S.p.A. - Chairman & CEO [25]

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Apart from the stock exchange.

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Alessandro Baj Badino, Guala Closures S.p.A. - Head of IR [26]

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Apart from the stock exchange.

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Marco Giovannini, Guala Closures S.p.A. - Chairman & CEO [27]

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Apart there from the stock exchange.

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Unidentified Analyst, [28]

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Yes. And lastly, on SharpEnd transaction, you said the amount you paid for the initial 20% acquisition was a limited amount. Would it be fair to assume it's like a couple of million?

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Marco Giovannini, Guala Closures S.p.A. - Chairman & CEO [29]

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Cameron Worth asked us not to disclose the figures. Sorry for that. But if you want to say that -- I can say the range of value is something like that, but I cannot give you the exact figures. I need to respect the other shareholder.

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Unidentified Analyst, [30]

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Of course. And so the remaining 80%, is there an agreement in place with the majority shareholder, whether it's like a put options or call options that, in the future, you might increase your stake in this company? Or you're happy with the current shareholder structure and you will carry on like that [28b]?

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Marco Giovannini, Guala Closures S.p.A. - Chairman & CEO [31]

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Yes.

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Operator [32]

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Our next question is coming from [Simon].

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Unidentified Analyst, [33]

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Sorry, it's Christie, actually. But my question has already been answered. It's okay.

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Operator [34]

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So our next question is coming from [Elizabeth].

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Unidentified Analyst, [35]

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Looking on the demand outlook. I mean it sounds like you haven't seen any slowdown in orders since the outbreak of the crisis, but what is your kind of view going forward if it persists? I'm just conscious that a lot of your products, maybe some of the spirits and wines, will be sold in kind of duty-free and traffic there will be a lot slower. So I'm just wondering what you're kind of thinking internally re-volumes this year. And then the follow-up to that would be kind of, if you do see a downturn in volumes, what you can do on the cost and on the CapEx side to kind of maintain profitability and to maintain cash flow this year. That would be the first question.

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Marco Giovannini, Guala Closures S.p.A. - Chairman & CEO [36]

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I think that we can share the answer between me and Franco. First of all, we are in 20 countries. Now I think that you need to keep going and thinking on that. People in Mexico, obviously, go on drinking tequila. People in Brazil still go on drinking cachaça. People in Italy will still go on drinking Aperol or digestif. So the overall consumption, I don't want to be cynical, but normally during such events, are increasing. That is our experience since 57 years, and not just for last year.

During the Ukraine and Russia war, consumption of vodka increased double digit. It's cynical, sorry to say that, but it works. So that is the first part.

As far as the, let's say, the duty-free channel, you are right. I think that there will be probably, the next quarter even more, a big impact on the general volumes on the duty-free segment. But we are not so much present on that. And so when you travel, normally on the duty free, you buy premium and super premium. It's for sure, we have a division for luxury closures. Now that is 3%, 4% of our total turnover linked to the duty free. So I don't want to be overoptimistic, but even if it will decrease 50% this part of our business, I think that we should be able to keep going with a reasonable profitability honestly. So I'm not so afraid about that. Of course, of course, if all the streets and the travels around the world will be stopped for more than 1 year, I think that we need to reassess some of our strategy. Of course, yes, probably we shall not invest anymore, and for example, a flexible automation to manufacture is coagulant special luxury closures. But honestly, and I would ask Franco to have his own comfort on that. I think that it's too early to assess, too early to assess.

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Francesco Bove, Guala Closures S.p.A. - COO & Director [37]

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Okay. I think Marco has said pretty much what was needed to say. So I confirm that. Now if your question is around, for example, what the reactions could be in case things get worse here in Italy, now based on what the government has so far decreed that -- is that if there are -- is that they have come up with additional, what's called, social buffers or social amortizes, which will allow factories, companies to basically use temporary layoff facility in case orders should come down, okay, for any reason as you were mentioning before.

Now we happen to manage our CapEx quite well, so we have, obviously, get a facility to reduce CapEx in time. However, a lot of our CapEx this year, for example, a good portion of our CapEx is growing, for example, in doubling of production in Kenya, where we see no issues right now. In fact, it's still looking extremely positive. So we do have a pretty flexible situation when it comes to having to curb down the Capex.

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Unidentified Analyst, [38]

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Okay. And then maybe one follow-up just on the acquisition strategy. Is it safe to assume that while some kind of uncertainty lingers in the background that you would potentially be not engaging in any bolt-ons over the near term?

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Anibal Diaz Diaz, Guala Closures S.p.A. - CFO & Director [39]

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That's fine. We will protect the cash flow because as Franco said, we are quite reactive to the situation. Today, talking about acquisitions, and today is not the day.

--------------------------------------------------------------------------------

Marco Giovannini, Guala Closures S.p.A. - Chairman & CEO [40]

--------------------------------------------------------------------------------

Yes. We need to digest. By the way, since now is Guala Closures Deutschland, it's no more Closurelogic. I think that first, we need to digest Deutschland. I think that probably in 2021, I'm just speaking my mind, there will be a lot of opportunities. As we know that several opportunities there. We know that small competitors are struggling. They are less flexible. They are more local.

--------------------------------------------------------------------------------

Anibal Diaz Diaz, Guala Closures S.p.A. - CFO & Director [41]

--------------------------------------------------------------------------------

Now -- today, as in the same way, we decided not to pay dividends. Today, we are not thinking acquisition. We got other concerns.

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Operator [42]

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Our next question is coming from [Ken].

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Unidentified Analyst, [43]

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Presentation has been very, very helpful. I'm just trying to understand, in this current environment where I imagine resin prices have -- or will be dropping very significantly, you have energy prices probably dropping significantly as well. I know in the past, you still managed to raise prices. But is it fair to say price is probably going down this year, and whether you can -- or you expect to maintain the current margins that you have?

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Francesco Bove, Guala Closures S.p.A. - COO & Director [44]

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Let me answer that, Franco. We've started the year quite well on that front, actually. Why? Because we've continued smoothly the fact that we started last year. So this year, we started with continuing to apply price increases where they are applicable. Customers have been accepting them. Okay? So we have a plan to continue that way. It's possible that, because of the current situation, we may have to give some, how do you say, some extended support to customers, in some cases. But it's things that we will be receiving, hopefully, from our suppliers as well. So in other words, if raw materials go down considerably and customers will expect some break, well, we'll make sure that the break we'll have to give will be at least something that will allow us to keep a portion and give customers a portion, which is what we basically have always done before.

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Marco Giovannini, Guala Closures S.p.A. - Chairman & CEO [45]

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By the way, the energy prices locally normally are managed by state company. So don't negotiate, includes (inaudible), you cannot negotiate the gas prices, by the way. They go, they increase full stop. So -- and we do exactly the same. If the gas price is going up irrespectively on the oil price is going down, we apply the same rules.

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Unidentified Analyst, [46]

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Okay. That's understood. And how much of your sales and volumes -- sales or volumes would be covered by this? Do you source sort of delivery system you have and raw materials? Do you have a sense of -- is it all of your volumes?

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Anibal Diaz Diaz, Guala Closures S.p.A. - CFO & Director [47]

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No. We're...

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Francesco Bove, Guala Closures S.p.A. - COO & Director [48]

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Yes, Franco. No. Frankly speaking, not all of the volume is -- not with all of the volume do we have the capability of dual sourcing. Okay? We try to have contingency situations where we have, for example, bespoke types of closures -- dedicated closures to certain brands. And we try to have some equipment to do different components in different places. And that has helped already also in the past. The example -- the perfect example is last year when Russia decided to ban all imports from Ukraine of aluminum closures, we were immediately able to basically move and produce different components for those closures in 2 or 3 different plants, assemble it together and sent it to Russia from a different country other than Ukraine.

So that was a perfect example to prove that when you have a multi-site situation with some dual-sourcing capabilities, that's when they helped. Then when it comes to, not dedicated closures, that is ROPP types of closures, wine types of closures, yes, we do have more capabilities. We have more factories that can do the same kind of product, and we can back that up more easily. I don't know if I've given you a clear answer on that.

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Unidentified Analyst, [49]

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No, it's helpful. And I appreciate the difficult situation. But is it fair to say that you guys are seeing an increase in your logistic costs? Why not? I mean do you have a sense of what is your fixed cost base and if you're seeing an increase in logistic costs. Yes?

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Francesco Bove, Guala Closures S.p.A. - COO & Director [50]

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Right now, we're not seeing increase in logistics costs. We saw it last year, but it wasn't because only -- it wasn't only because logistics costs were going up. It was only -- it was what I said before, again, with the Russia and Ukraine situation. Yes, that increased our logistics cost because we had to do for several months continuous triangulation type of operation, if you see what I mean. So that's sort of -- had a little bit of a toll on the freight side. Otherwise, no. Right now, we're not seeing any increase in logistics costs. As I said before -- like I said before, transports right now are readily available.

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Unidentified Analyst, [51]

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Okay. Now that's very, very helpful. Sorry, I just have 2 more, and I'll get back in queue. The first one is just a housekeeping one. Just so Italy, what is that? What is the -- the plants you have in Italy, they account for what percentage of sales, just so I'm clear?

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Anibal Diaz Diaz, Guala Closures S.p.A. - CFO & Director [52]

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Sorry?

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Francesco Bove, Guala Closures S.p.A. - COO & Director [53]

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The plant sales for Italy. Actually...

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Claudia Ilaria Banfi, Guala Closures S.p.A. - Group Finance & Administrative Director [54]

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11%.

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Francesco Bove, Guala Closures S.p.A. - COO & Director [55]

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11%.

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Unidentified Analyst, [56]

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Okay. 11%. Okay. And then just lastly, on liquidity. The minimum cash you think you need, if you could just remind me, to run the business and whether you expect to draw down on your RCF or not or even repay it. And then just what you have available on your factoring would be helpful?

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Anibal Diaz Diaz, Guala Closures S.p.A. - CFO & Director [57]

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Okay. The debt reduction, of course, is going to go mainly to the reduction on the revolver, in -- because the bonds are -- they are fixed. And so we are using the revolver as it is when we need -- we required and when we don't need, we repay. So the minimum cash is around what we have at the 31st of December.

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Unidentified Analyst, [58]

--------------------------------------------------------------------------------

Okay. And factoring, sorry?

--------------------------------------------------------------------------------

Anibal Diaz Diaz, Guala Closures S.p.A. - CFO & Director [59]

--------------------------------------------------------------------------------

Factoring was around EUR 29 million, at the same level of 2018.

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Unidentified Analyst, [60]

--------------------------------------------------------------------------------

And the program size for that, just one, what's the max you can do on factoring?

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Anibal Diaz Diaz, Guala Closures S.p.A. - CFO & Director [61]

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I do not know the maximum. We have a lot of -- but we are trying as a portfolio reducing the working capital, maintaining the level of factoring in the same range. So we reduced the receivables, we are maintaining the inventories at the same level, and that's what we manage.

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Unidentified Analyst, [62]

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Okay. So it sounds like, like you're currently maxed out. Okay, okay. But -- okay. You're currently maxed on factoring, but you expect to be fully cash generative this year, right? There's no way you shouldn't be cash generative.

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Anibal Diaz Diaz, Guala Closures S.p.A. - CFO & Director [63]

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I didn't understand the word. I didn't understand.

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Unidentified Analyst, [64]

--------------------------------------------------------------------------------

So I just had to -- it sounds like there's no headroom left on factoring, but I was asking, does that mean that do you expect to be?

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Anibal Diaz Diaz, Guala Closures S.p.A. - CFO & Director [65]

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No, no.

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Claudia Ilaria Banfi, Guala Closures S.p.A. - Group Finance & Administrative Director [66]

--------------------------------------------------------------------------------

No.

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Anibal Diaz Diaz, Guala Closures S.p.A. - CFO & Director [67]

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That's right. Today, no. I think the factoring is a good business for reporting the same financial industry. And no, I'm not seeing -- nothing against in the future again in this system, so no problem there.

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Operator [68]

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Our next question is coming from Felix.

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Felix Eisel, Conduction Capital Advisers - Founder and Partner [69]

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This is Felix from Conduction Capital. First of all, good to hear that none of you guys are sneezing or coughing, so that seems to be for a healthy management team. I have 1 question or 2 questions about maybe a real tail risk. What would happen if your business or, let's say, Italy or a bunch of nations have to go on full stop also in industrial production, how quickly would it take -- or how long would your business -- would it take your business to get back online, looking at the complexity of where you source your raw materials? Yes, that's the first question. And the second one, are you -- have you made contingency plans with the banks if there's a full stop at some point? Do you think banks would be supportive for your lenders? That's all.

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Anibal Diaz Diaz, Guala Closures S.p.A. - CFO & Director [70]

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Well, when you're saying a full stop, you are saying the group? No, the group is important. When you are saying a full stop, you are talking about the whole group or about 1 country or 2?

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Felix Eisel, Conduction Capital Advisers - Founder and Partner [71]

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Well, it could be anything. Well, it could be that many nations go full stop, yes.

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Anibal Diaz Diaz, Guala Closures S.p.A. - CFO & Director [72]

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Okay. Let me -- if it's the whole group, okay, we stop the world. So as an assumption, it's quite difficult to...

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Marco Giovannini, Guala Closures S.p.A. - Chairman & CEO [73]

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If we stop the group -- sorry, sorry for a joke, but if you stop the group, you would never drink any more Johnny Walker. No it's not a problem.

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Anibal Diaz Diaz, Guala Closures S.p.A. - CFO & Director [74]

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No, it's not a problem of drinking. But stopping 20 countries, to be fair, okay, this scenario, quite difficult to answer. If we stop 1 country or 2 countries or 1 region, Franco said before, we have some closures that are made only in one factory, but most of our closures, we can make in different factories. So at the end -- imagine that the stop keeps for many, many months, at the end, if we are not able to produce one particular closure, the customer will change the closure. Don't forget, and for the people knowing us for many years, we said during the year, several things, and today, unfortunately, because of this crisis, we can say that are true. The first one, we are one of the -- we are the only closure producer that we can switch materials. So we can go from aluminum to plastics. So imagine that the problem is in the aluminum, we can go to the customer and say, "let's take the plastic closure," for a lot of products.

The other thing is that our growth is not based in the higher alcohol consumption in the world. So when there is a crisis as we went through other kind of crisis, for example, in 2009, and when the stock reduction produced by the crisis stops, we sell, again, the same we were selling before the crisis. Why? Because the people at the end of the day, they consume the same amount of alcohol around during the year. So it's possible that we can have 1 quarter with difficulties, but at the end, how much time do we need to restart the factory? Normally, I don't know, Franco? The drinking department, is what, 3 days, 4 days? Yes?

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Francesco Bove, Guala Closures S.p.A. - COO & Director [75]

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Yes.

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Felix Eisel, Conduction Capital Advisers - Founder and Partner [76]

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Okay. Right. Well, it sounds like you will be the perfect (inaudible) when we can recover?

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Anibal Diaz Diaz, Guala Closures S.p.A. - CFO & Director [77]

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Yes. Until now -- Franco said already, until now, we are not having problems of requests from our customers. Of course, 1 day or another, we will have some impact. But at the end, we will recover the level of volume we had before.

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Francesco Bove, Guala Closures S.p.A. - COO & Director [78]

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Yes. Just to add to this, 2 days ago, we didn't know -- what we knew was that there were possibilities that the government was going to stop the whole country, which they did, that including factories. Okay? So up until 2 days -- up until last night, we thought that, that could have happened. So we had a business continuity plan already formed based on that type of scenario. Okay? So we had -- we already had prepared a -- check the stocks that were available inside here to be shipped immediately, stocks that were already available outside, transferring all the print -- all the artwork out of the Magenta plant to go to other factories where we do printing and coding on flat sheet. So we had already prepared for the worst case. Fortunately, the whole country did shut down, except production factory that produce. Okay? And except production and, of course, pharmacies and supermarkets, food stores.

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Marco Giovannini, Guala Closures S.p.A. - Chairman & CEO [79]

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Okay. So honestly, we are not overoptimistic, but thinking that the full world will stop, seems to me, a little bit too pessimistic, by the way. By the way, in China consumption is starting back again. That's the general comment. But they stopped for almost 2 months, and now consumer consumption and production is starting back again the same level. So I think that we need to be vigilant on that.

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Anibal Diaz Diaz, Guala Closures S.p.A. - CFO & Director [80]

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I mean in our financial point of view, we are in a safe harbor, yes, because we financed the bonds last year. We've refinanced. So to be fair, today, we are in a safe harbor. Different would be is somebody that needs to refinance immediately. But today, we are very, on that sense, very quiet.

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Operator [81]

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Our next question is coming from Enrico.

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Enrico Antonio Coco, Intermonte SIM S.p.A., Research Division - Research Analyst [82]

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My question was on the outlook for consumption and has been answered. Maybe you could share with us what kind of slowdown you saw in China in the last 2 months. You mentioned the fact that now consumption is restarting. My question was, what kind of a slowdown? Yes. We went to almost 0 or...

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Anibal Diaz Diaz, Guala Closures S.p.A. - CFO & Director [83]

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No.

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Marco Giovannini, Guala Closures S.p.A. - Chairman & CEO [84]

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Franco?

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Francesco Bove, Guala Closures S.p.A. - COO & Director [85]

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Let me answer that. Okay. As you know, we have one operation in China, in the North of Beijing area, which is a small operation. Okay? It has a very low weight on our total consolidated sales. However, that went down like all the other factories went down for about 2 weeks. This is about 3 weeks ago, 4 weeks ago. Okay? Then it started at a slow pace because not all people could return to work because a lot of the people that have to return the work, they were coming from areas that are infected, so they have to go into quarantine at least for the amount of time. So it started slowly. As of today, it is still not -- and this is not only our factory. It is still not at full speed because a lot of distilleries who are our customers are not being able to produce, because they still don't have the labor force to do it. So to be honest, the situation in China is still not looking the way we could think it could look. It's getting better, but it's not at its 100% yet. And it is luckily, it's a very small -- it has a very small impact on our total.

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Marco Giovannini, Guala Closures S.p.A. - Chairman & CEO [86]

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Percent of the risk. I think let's put figures down. I think that our Chinese operation represents a 2%, 2.5% of total sales of the group. It's really an attempt -- -- more of them are big plant. It's an attempt for us to follow the Chinese market. And we do -- it will work, by the way, more for Mongolia and Korea in the past than for China. So it is very small. But I insist they are starting back again and now go to produce and not only in our factory, no, in -- all over China. So I think that -- I insist we need to be on the basics, on the ground floor, following the situation very closely and react as fast as possible as honestly, we have done in February. So that's the advantage of being local or global, as people say. We are global in terms of supply, but we are local. So that's the big advantage of our...

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Anibal Diaz Diaz, Guala Closures S.p.A. - CFO & Director [87]

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Yes. A little more precise, China for us is 1%.

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Marco Giovannini, Guala Closures S.p.A. - Chairman & CEO [88]

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It's 1%.

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Anibal Diaz Diaz, Guala Closures S.p.A. - CFO & Director [89]

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The other half of China, we send to Mongolia. But anyway, that's...

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Marco Giovannini, Guala Closures S.p.A. - Chairman & CEO [90]

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China -- for China is 1%. The total is 2%, 2.5% of the sales.

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Operator [91]

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Our next question is coming from [Emilia].

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Unidentified Analyst, [92]

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Just a housekeeping info. Can you please break down the IFRS 16 impact on the EBITDA for Q4 and full year, please?

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Claudia Ilaria Banfi, Guala Closures S.p.A. - Group Finance & Administrative Director [93]

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The -- we can comment on the full year. That was EUR 5.4 million.

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Unidentified Analyst, [94]

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And for full year -- and do you have the figure for Q4, please? (inaudible)

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Alessandro Baj Badino, Guala Closures S.p.A. - Head of IR [95]

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Emilia, (inaudible) will provide you the number.

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Unidentified Analyst, [96]

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I guess I can work it out from the 9-month figure that you had provided. 5.4% for the full year, that's what you said. Right?

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Alessandro Baj Badino, Guala Closures S.p.A. - Head of IR [97]

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Correct.

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Operator [98]

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We have 3 questions in queue. So this will be the last?

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Alessandro Baj Badino, Guala Closures S.p.A. - Head of IR [99]

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Yes, please.

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Operator [100]

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Okay. Got it. And we have [Ash] on the line.

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Unidentified Analyst, [101]

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This is [Ashish] (inaudible) Capital. Thanks for the very thorough presentation and answering all these questions. It's very helpful for us. Just along the lines of your banking relationships, could you remind us of any financial covenant tests that sit within your banking agreements that we should be aware of? I'm not under the assumption that you would remotely come close to triggering. I'm just looking to confirm borrowing any further extremes in the operating environment.

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Anibal Diaz Diaz, Guala Closures S.p.A. - CFO & Director [102]

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Okay. Very, very fast, no, we have no problem with because mainly the covenants are maintenance. So it's not there. And as I said before, because we refinanced it last year, we are in a very quiet situation in our financial point of view. That's what I think.

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Operator [103]

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Now we have 2 questions in queue. And the next question will be coming from [Izahu].

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Unidentified Analyst, [104]

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I have 3 but quite quick ones. First one is on organic top line growth. We saw an acceleration in the final quarter of 2019. Should we expect a similar pace also at the beginning of 2020? So something probably in the region of 3%, 3.5% and, let's say, before any potential impact from the COVID-19 outbreak?

Second one is on 2020 EBITDA. I understand you do not disclose your guidance. But on a qualitative basis, can you tell us the -- how the drivers of your EBITDA bridge will -- how will they evolve in 2020 on a qualitative basis? And then last, can you just confirm that the EUR 14.7 million net profit is after minorities? And if this is the case, can you tell us, which is the amount of minorities that you recorded -- net profit to minorities that you recorded in 2019?

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Anibal Diaz Diaz, Guala Closures S.p.A. - CFO & Director [105]

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Okay. Well, first of all, we are not giving the guidance. If you're asking for the guidance of our quarter, that is much more difficult in the way that the quarter, as we always said, is a very short period of time for Guala. Anyway, Franco and Marco, they said before that we are not having problems with requests from our customers. About the EBITDA, we keep doing what we were doing in the previous year, mainly last year. So if the market is there, we are increasing prices. And Franco said before. Of course, if we are in a situation where the oil is going to be $30 per barrel and the energy going to reduce is possible, we are not going to need to give something to the customers. But by the way, in the same way, sometimes we are penalized because we do not have pass-through automatic. Also, they when -- they work when the raw materials and the energy is reducing. So we do not have clause of pass-through to the customers all the reductions. About the EUR 14.7 million, yes, it's after minorities. But Claudia, can you tell how much for the minorities?

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Claudia Ilaria Banfi, Guala Closures S.p.A. - Group Finance & Administrative Director [106]

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I announced Guala on the EUR 14.7 million is the total net result of which EUR 7 million is for minorities, and the remaining EUR 7.7 million is after minorities.

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Operator [107]

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And the last question that we have in queue is coming from [Ricardo].

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Unidentified Analyst, [108]

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Sorry, my question was already asked, but I just didn't understand the answer. Like I think they asked about the liquidity. Sorry, what is the minimum cash balance that you require in order to operate business, which you answered that what you see in December is sort of the minimum cash, but I think maybe that was not the right understanding?

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Anibal Diaz Diaz, Guala Closures S.p.A. - CFO & Director [109]

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No. It's the -- I said take them -- the standard number as a normal cash for the group. I don't know what -- yes?

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Unidentified Analyst, [110]

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Yes. Like what is the minimum cash that you would require, let's say, to operate the business? Just...

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Anibal Diaz Diaz, Guala Closures S.p.A. - CFO & Director [111]

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I don't understand the question.

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Claudia Ilaria Banfi, Guala Closures S.p.A. - Group Finance & Administrative Director [112]

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Anibal, we said in the past that the minimum cash we had along the period could be around EUR 35 million, EUR 40 million. And then also based on the cash flow in some periods, so we are over this amount, for example, at year-end. So consider EUR 35 million, EUR 40 million.

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Marco Giovannini, Guala Closures S.p.A. - Chairman & CEO [113]

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Just a final comment -- a final comment. Please do not forget that we are, by far, #1 worldwide in our business. So we respect our customers as well as our customers respect us 100%. So there is a mutual respect. That means that if somebody is in a trouble, and it is not always the supplier, it could be in the customers, we always helped out each other. So that is fundamental as we are the only one that could provide 65% of safety closure worldwide. So we are very much respected by our final customers.

On the other side, for the special alloys used worldwide to produce aluminum closures for bottles, we are, by far the #1 consumer. So we -- if the aluminum closure methods, we (inaudible) even better. We lose Europe for Guala Closures, for them is a bankruptcy. So again, there is a very high mutual respect between us and our suppliers. I think that all of you guys should really speak your mind this concept. So in the supply chain -- in our supply chain, we are very important for the task, for the peak and very important for the valley. I hope you'll see what I mean. Okay?

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Anibal Diaz Diaz, Guala Closures S.p.A. - CFO & Director [114]

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He wants to calculate the minimum cash (inaudible).

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Marco Giovannini, Guala Closures S.p.A. - Chairman & CEO [115]

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We cash -- calculate the minimum cash.

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Anibal Diaz Diaz, Guala Closures S.p.A. - CFO & Director [116]

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Okay. Thank you.

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Marco Giovannini, Guala Closures S.p.A. - Chairman & CEO [117]

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Thank you.

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Claudia Ilaria Banfi, Guala Closures S.p.A. - Group Finance & Administrative Director [118]

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Thank you, everyone.

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Francesco Bove, Guala Closures S.p.A. - COO & Director [119]

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Thank you, everyone.

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Marco Giovannini, Guala Closures S.p.A. - Chairman & CEO [120]

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And I hope (inaudible) good for the future. That is the most important items today. All the best.

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Anibal Diaz Diaz, Guala Closures S.p.A. - CFO & Director [121]

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Bye.

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Marco Giovannini, Guala Closures S.p.A. - Chairman & CEO [122]

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Bye-bye.

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Claudia Ilaria Banfi, Guala Closures S.p.A. - Group Finance & Administrative Director [123]

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Bye.

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Operator [124]

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That concludes today's conference. Thank you for participating. You may now disconnect.