CLS H1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
August 13, 2025

Key Takeaways

  • Positive Sentiment: Strong leasing momentum with GBP 7.5 m annual rent signed in H1 (17% YoY), accelerating in Q3 and expected to drive vacancy down in H2.
  • Positive Sentiment: Over 50% of the CHF 400 m sales target executed (CHF 209.5 m), reducing LTV to 49.2% and recycling capital for portfolio investments.
  • Positive Sentiment: More than 90% of 2025 refinancings completed or agreed at a cost of 3.75%, smoothing maturities and lowering refinancing risk.
  • Negative Sentiment: Portfolio valuations fell 1.6% in local currency and EPRA EPS was down 16.7% to 4 pence per share, impacted by yield expansion and lease expiries.
  • Positive Sentiment: Active investment and development projects (Citadel Place, Bricks, Yellow, Debussy) are progressing to unlock value and support future earnings growth.
AI Generated. May Contain Errors.
Earnings Conference Call
CLS H1 2025
00:00 / 00:00

There are 4 speakers on the call.

Operator

Good morning, and welcome to CLS Holdings PLC Half Year Presentation twenty twenty five. Let me start with an introduction. I am Fredrik Witland, Chief Executive and next to me is our CFO, Andrew Kirkman. This morning, we will present the results for the first six months that we announced this morning. Before we go into more detail later in the presentation, I would like to set the scene by highlighting our current main priorities and how we are delivering against them.

Operator

First, increasing letting activity to reduce vacancy and improve earnings. We've had positive leasing momentum in all countries since the beginning of the year, and this trend is accelerating. As the vehicle reduces, earnings should start growing again over time. Second, executing sales of CHF400 million to reduce LTV to our target range of 35% to 45%. We have set out a target to sell 400,000,000 of properties to reduce loan to value and recycle capital for investments.

Operator

We have completed on over half of the sales so far, including GBP 143,000,000 this year and the remaining GBP 190,000,000 is in progress. Third, completing refinancings due in 2025. We had a significant amount of refinancings in 2025 and we have now completed or agreed over 90%. We are confident that the remaining 10% of the 2025 refinancings will be successfully completed. And fourth, investing in our portfolio to unlock value within the portfolio.

Operator

There are significant opportunities within the portfolio to drive value and we have progressed both planning and engagement with potential partners for Citadel Place. Our projects at the Bricks, the Yellow and Debussy in Germany and France are on plan, together with several refurbishment and residential conversion plans across the portfolio. This will result in a rebasing of the business to deliver a more focused portfolio with higher quality, faster growing properties and future earnings growth. On the next slide, I will start with an overview of the first six months of the year. On the operations side, we had strong leasing momentum with GBP 7,500,000.0 of annual rent signed, which was healthy growth compared to the same period last year.

Operator

We have seen this accelerating in Q3 with several new leases signed or agreed. Vacancy increased as flagged at year end results to 15% by June 30 due to expected expiries at New Printing House Square in Central London to support the repositioning of the building for future development. We expect vacancy to start reducing in the second half of the year, and I will go into that into more details later. Valuations in the first six months were down 1.6% in local currency, driven by further yield expansion and increased vacancy. The reduction in office valuations followed the same trend that we saw in the 2024 with increasing investment activity and stabilizing interest rates.

Operator

We believe that there are now many signs that we are at the bottom of this property cycle. As you heard on my opening slide, we are progressing with our sales program and have sold or unconditionally exchanged on properties in all three countries. Investment markets are more active and both The UK and France reported increased volumes. Germany is still a bit more challenging although our sales plan include long term government properties, which we believe will be more attractive to investors. Despite a strong start to the year on the leasing side, we also had several larger expires in The UK and Germany, which meant our contracted rent fell.

Operator

We had some offset from lower financing costs, but in combination with the sale of properties, this meant that our EPS was down 16.7% to 4p per share in the period compared to last year. In April, we announced a new dividend policy of 1.5x to 3x cover and the interim dividend of 1.3x per share is in line with this new policy. Finally, on the right hand side, you can see that our portfolio is now split 47 Germany, 13% France and 40% in The UK. This is the result of the sales in The UK, and we expect this to rebalance back as we close on the recent and upcoming sales in Germany and France. On the next slide, I would like to go into more details about the leasing and the vacancy.

Operator

So leasing activity continued to increase in the period. And on the left hand side, you can see that we secured GBP 7,500,000.0 of annual rent, which is 17% more than the same period last year. The leases signed were 0.8% below ERV. Excluding two larger renewals at New Printing House Square, the other 50 transactions that we completed were at 7% above ERV, a very robust rental growth. Post half year, we have also completed new lease at the Code in Vauxhall and OfficeConnect in Cologne.

Operator

We are in advanced discussions about 2.5 floors at the Ortizen and further government leases in Germany that would reduce group vacancy by over 2% on a combined basis. Like for like ERVs for the portfolio grew 0.4% in the period. And while that is lower than the level we are signing new leases at, we expect rental growth to continue as tenants will pay for the right properties in the right locations. On the right hand side, you can see that our reported vacancy increased despite a strong six months on the leasing side. This was due to expiries in The UK and Germany.

Operator

The UK vacancy increase was driven by New Printing House Square, a building located on Grace Inn Road in Central London. In 2024, we took the decision to agree a surrender of the head lease expiring in June 2025 and contract directly with the subtenants to agree a block date for 2029 when all leases would expire. The longer term plan and value creation for the building is as a development. We have now signed new leases for over 50% of the tenants and expect this to increase further before year end. The remaining leases expired in Q2, which impacted vacancy but gave us a much better positioned property over time and an opportunity to write new leases above the old passing rent.

Operator

In Germany, we had a few different expiries in the first half of the year. With increased activity, limited new supply and a real push from employers to have staff back in the office, we expect vacancy to start reducing in the second half of the year and into 2026. On this slide, Slide seven, we have highlighted more details about the largest leases signed in the period. We had a mix of renewals and new leases. And as you can see, the tenants represent a great mix of companies ranging from banks, media, IT, insurance to multinationals and government.

Operator

I'm especially pleased that we have seen significant progress on the code with three new leases signed, taking the property to over 50% let and that we are continuing to attract German government entities to our portfolio with another deal signed in Dortmund. Activity post close has been strong. And in addition to the two lease at the code, we have signed a new ten year lease with the multinational company active in crop protection at our property in Cologne. Competition was fierce, but the flexibility of this space and the transport connections meant that we, in the end, secured the lease at 3.6% above the ROE. We have also agreed an extension in Paris at our Pierre Vallette property, which is an area that will benefit greatly from the new Grand Paris Express railway project due to open in 2026.

Operator

Now moving on to valuations on the next slide and what we're seeing in terms of the direction. At the group level, valuations declined 1.6% in local currency with the main driving yield expansion and a decline at Spring Gardens due to the shortening lease. On a sterling basis, the portfolio was up 0.6% due to FX movements. Similar to the 2024, we saw some properties starting to increase in value in the first '6 months of twenty twenty five, driven by the new leasing transactions. In The UK, valuations were down 2.2 and equivalent yield was up 10 basis points.

Operator

It's again worth highlighting that adjusting for Spring Gardens results in only a 0.4% decline for the rest of The U. K. Portfolio. In Germany, valuations were down 0.5% from equivalent yields increasing two basis points. The reductions were evenly spread across most cities and properties.

Operator

And with flat ERVs, it was a stable period with many market participants taking a wait and see approach. In France, valuations were down 3.5%. Both ERVs and yields were flat and the main decrease came from valuation assumptions around future vacancy and supply in Paris. Analysis of reports from brokers point to 3% to 3.5% general market decline in the first six months of Paris. With leasing activities holding up well and investment markets gradually becoming more active, in combination with the property yields having now adjusted to the new interest rates levels and some properties starting to increase in value, we believe we are now at the bottom of this property cycle even if the recovery is likely to be gradual.

Operator

In the first six months of the year, we completed on the sale of Springmuse Student in Vauxhall and Grefelfing in Munich. Post close, we have closed on the sale of Lerre Fletz in Lille, an exchange on Jarrestrasse in Hamburg, which will close in August. So good progress on the sales program. The properties were on an aggregate level, so close to book value. We are taking a pragmatic approach and have on occasion sold properties at a discount to ensure progress and delivery.

Operator

But overall, we are maintaining pricing discipline. In total, this represents sales of SEK 143,400,000.0, which in combination with the 66,100,000.0 sold last year takes us to 209,500,000.0, over 50% of our target of 400,000,000 of sales. This leaves us with CHF 190,000,000, which we are actively progressing with various marketing activities ongoing. The proceeds will be used to pay down debt to take the loan to value within our range of 35% to 45% and to release funds for investments in the portfolio. We will keep monitoring the scale and composition of this program, pending how valuations move and leasing progresses, which also impacts our loan to value and earnings capacity.

Operator

I'll now hand you over to Andrew for more details on the financials and the portfolio.

Speaker 1

Thank you, Fredrik, and good morning both to those in the room and to everyone online. This morning, I'm going to run you through our first half financial results, the successful refinancing activity that we've so far executed in 2025 and the progress that we've made with the remaining 2025 refinancings such that over 90% of 2025 refinancing activity has now been completed or agreed. And finally, our diversified occupiers on an increased level of index linked leases. On this slide is a picture of the yellow in Dortmund, where we're carrying out an extensive refurbishment for our new tenant, the City of Dortmund, which has signed a twenty year lease for 9,600 square meters. The space has started being handed over and it's so good the city has agreed to take more space in the building.

Speaker 1

Slide 11 sets out some key financial metrics for the business, which I'll run through in more detail over the following slides. In summary, CLS continues to deliver resilient performance against a demanding but improving market. This market has led to reduction in valuations and lower rental income from expected expiries and disposals, but with some offset from lower finance costs and a weakening of sterling against the euro. As a result, EPRA NTA was down 2.6%, EPRA EPS was down 16.7%, and the proposed interim dividend of 1.3p is in line with our previously announced dividend policy being covered 1.5x to 3x EPRA earnings. This also allows us to retain funds within the business to deliver on our refurbishment opportunities.

Speaker 1

The balance sheet remains strong with positive progress as LTV has reduced by 1.5% to 49.2% from the completion of sales as part of our ongoing program as well as a slightly lower cost of debt at 3.75%. And now for some more details around these numbers and the drivers behind them. Turning to the next slide, I've set out some more detail on the movement in net rental income and EPRA earnings. Earnings have been understandably impacted as we deliver a more focused business with higher quality, faster growing properties. The principal movements in net rental income, which are highlighted in the graph on the left, are as follows.

Speaker 1

Firstly, as Fredrik has already touched on, the occupational market remains healthy, and we had an increase of 1,300,000 from new leases and renewals. There was also a 400,000.0 increase from indexation as over half our properties are index linked. Secondly, as flagged, a GBP 3,100,000.0 decrease from lease expiries. Thirdly, given our disposal program, rent decreased by GBP 1,400,000.0 from developments and disposals, and the hotel and student rent decreased by GBP 400,000.0 from the sale of Student. And finally, there was a GBP 2,400,000.0 reduction in other and FX, which is essentially driven by lower income settlements.

Speaker 1

On the right hand side, this £5,600,000 decrease in net rental income translates into the £1.4 per share decrease in earnings. We are taking positive steps to improve earnings. At the end of the first half, we implemented a cost reduction program targeting annual savings of over £2,000,000 and saw a slight 0.1p decrease in first half expenses. We will continue to ensure that the cost base remains proportionate to the size of the business. Further, we saw a reduction in net finance costs of 0.4p from lower net debt and lower interest rates.

Speaker 1

And finally, sterling weakened against the euro, giving a 0.1p benefit. The waterfall chart on Slide 13 sets out the main components of the movement in EPRA net tangible assets, with NTA decreasing by 2.6% or 5.5p per share. Going through the components of the movement from opening to closing NTA in order. We have EPRA earnings of 4.0p, which I've just walked through. The final 2024 dividend paid in May of 2.68p per share.

Speaker 1

The valuation decrease of 1.6% or 8p with decrease in all countries, albeit these are definitely starting to bottom. This means MTA is also bottoming. Sterling weakened by 3.6% against the euro in the period, resulting in a 4.7p increase. This is the increase in the value of our properties in Germany and France, partly offset by the natural hedge of the associated euro debt. And lastly, other of 0 1.6p is made up of small movements on several items.

Speaker 1

Slide 14 sets out the movement in CLS' liquid resources during the 2025. Overall, our cash position remains broadly similar to the year end at roughly GBP 150,000,000 of cash and undrawn facilities despite a significant level of degearing. The story of our cash movements in the first half is told by the two largest bars in the middle, with the sale of properties used to pay down debt, with net debt reducing by £80,000,000 since the year end as well as successfully refinancing debt as it became due, about which I will comment upon more shortly. Capital expenditure dropped down to our more usual level with full year expenditure of £25,000,000 to £30,000,000 expected. This follows the substantial investment in the portfolio in recent years to bring it to the high quality expected by Terrence.

Speaker 1

Lastly, cash from operations less interest and tax remains good and covers the interim dividend of £5,200,000 Interest cover at 1.9 times remained healthy, although as I'll explain on the next slide, it has limited relevance for CLS in terms of our financing. Financing is a key part of CLS' business model, and therefore, I've included two slides in this presentation. The first slide, Slide 15, summarizes CLS's financing strategy and some of our key metrics. There are three points to highlight. Firstly, in terms of strategy, CLS uses secured SPV financing with 25 different lenders and maintains over £100,000,000 of cash and cash equivalents and undrawn facilities.

Speaker 1

There are no group loan to value or interest cover covenants. Secondly, as part of our deliberate efforts to reduce gearing, net debt was reduced by £80,000,000 LTV fell from 50.7% to 49.2% and would have decreased further if there had not been slight valuation declines. We are forecasting that LTV will reduce to within our target range of 35% to 45% by year end as more of the planned sales are delivered. And finally, our cost of debt decreased by two basis points to 3.75% as sales were used to pay more expensive debt and retain longer term lower cost debt. Slight further falls are predicted by the year end driven by sales, which will again be used to repay expensive debt.

Speaker 1

Slide 16 summarizes our refinancings completed in the first half and year to date and our focus for the rest of the year. The chart in the left hand corner shows the position at the start of the year and the position is at the half year. At the start of 2025, pounds 373,700,000.0 of debt was maturing. Refinancing has gone successfully with £192,300,000 maturities refinanced or repaid by half year. The refinancings of £157,000,000 were executed at 4.11%.

Speaker 1

Since the half year, we have refinanced or repaid £118,500,000 and £25,100,000 has been credit approved and will complete by the September. As a consequence, over 90% of twenty twenty five debt refinancing has been completed or agreed. This leaves just £28,200,000 across three loans, which expire in Q4 twenty twenty five to be refinanced, and we are confident in dealing with these. The other pleasing aspect of our refinancing activity in 2025 is that our debt profile is much more evenly spread with no more than GBP 170,000,000 expiring in any one year, significantly reducing future refinancing risk. My penultimate slide, Slide 17, is a familiar one, which illustrates our high quality and diversified tenant base across our three markets.

Speaker 1

The three key points to highlight are: our properties remain strongly multi let with our six ninety four tenants equating to an average of nearly nine tenants per building our active letting progress in the first half is reflected in the movement in our top 15 tenants. The major movers being the lease sign at The Bricks with the City of Essen sees them entering the chart at number four, whilst the lease for the City of Dortmund sees them initially entering at number 12, and they will continue to increase in importance as they take up more space at the yellow. Signature Litigation is now our sixth biggest tenant as a result of signing a new ten year lease for the whole of the office space in our building in Fetter Lane in London. And Kantar and have dropped out of the list following the expiry of their lease at New Printinger Square, although Kantar has chosen to renew some of their space. Finally, there has been limited change in our tenants in terms of size and industries, which remain strong and diversified, which is reflected in our continued rent collection of 99%.

Speaker 1

My final slide summarizes the resilience of our income with letting activity, particularly in Germany, driving this up to over 60% of rent being index linked. As noted, this indexation continues to provide support to our net rental income. The amount of indexation and how it works does vary by country. Most UK leases are not index linked, but benefit from upward only rent reviews. Although this may be different in future as a result of proposed legislative change, we expect the impact to be limited as most leases are settled at market rents anyway.

Speaker 1

However, Spring Gardens had a 3.5% rent increase midyear twenty twenty five due to the rent being linked to RPIX. In Germany, as a result of the increased letting activity, particularly with local authority tenants, 76% of our leases are CPI linked, up from 57% a year ago, and these rose by 2.4%. In addition, a further 12% of our June leases have contractual stepped increases. And lastly, in France, all leases are index linked. In the first half, we saw an inflation increase of 1.4%, and we expect a further increase in the second half.

Speaker 1

And with that, I'll hand back to Fredrik.

Operator

Thank you, Andrew. And on the following few slides, I would like to give an update on some of the larger projects on which we are working. At Citadel Place or Spring Gardens, we are progressing the planned application or the planning application and working closely with Lambert Council to optimize the scheme and the design. In parallel, we have started engaging with potential partners around the delivery of the site with various options being discussed. These discussions are constructive and positive.

Operator

We now aim to submit a planning application later in 2025 to accommodate potential development partners in the actual delivery of the site and the design. Our two projects in Germany at the Bricks in Essen and the Yellow in Dortmund are also progressing. At the Bricks, we have handed over Phases one and two, which represents 80% of the space, with the final phase due to be completed in Q4. At the yellow, we have completed and handed over the first phase, and the second and final phase will be completed in early twenty twenty six. At Debussy in Paris, where we are planning on converting an existing office building to serviced apartments pre let on a twelve year lease.

Operator

We received planning approval from the city earlier this year and have now relocated some of the existing tenants to our nearby building, Sigmar, where they have vacated. Stripping out works are in progress, and we expect to start construction after the summer once all necessary permits are in place. At New Printing House Square, we have made progress on positioning the building for redevelopment in 2029 by signing over 50% of the existing tenants on leases expiring in 2029. And we have also started to engage with advisers to work on the long term future of the building. In addition, we're also progressing PDR permissions on a handful of U.

Operator

K. Properties. Now turning on to the next slide, I will provide a short update on our sustainability program and the progress we are making. The work we're doing to meet our net zero carbon pathway is continuing, and we estimate that we will have spent GBP 22,000,000 by the 2025 out of the estimated GBP 65,000,000 we announced back in 2021 when we announced the overall 2030 plan. For 2025, the projects we are completing are forecast to save over 1,500 tonnes of CO2 emissions per year.

Operator

These projects include upgrading gas boilers to heat pumps and installing smart meters for water usage. In relation to U. K. EPC ratings, we are confident in meeting the expected regulatory requirements by 2027 and 02/1930. Being halfway through our current net zero carbon policy in 2025, we're also currently reviewing our plans to ensure we spend our CapEx in the best possible way and over the right time line.

Operator

Let's now move to the summary and outlook sections from Page 23. So starting with The U. K. On the left hand side of the slide. In The U.

Operator

K, we are seeing a more positive outlook for both leasing and investment markets with the first six months showing improvements with more transactions and activity. There's also real momentum in employers requiring staff back to the office with the requirements for more space following thereafter. Both press and service are reporting this change in attitude, a recent example from our own portfolio that many occupiers are now asking for more space per employee when looking for new offices. Vacancy in London and the Southeast is stable or decreasing. And with limited new supply, we do expect vacancy to continue to reduce near term.

Operator

In Germany, we also have more positivity after the new government has provided much needed direction and a more pro business attitude. Leasing take up did increase in the first six months, although the investment market is still to show any meaningful improvements, although office has increased its share of transactions. In France, we have a more complex parliamentary situation after the election last year. And this, together with a more challenging supply and demand balance for offices in parts of Paris, means that there is still a lot of caution in this market. So overall, property markets are improving with value stabilizing, activity increasing and the macroeconomic outlook somewhat improving, all giving us more supportive market fundamentals going forward.

Operator

Moving on to the next slide. Our operational focus, as I heard, is to reduce vacancy and especially in The UK. And we're now seeing good momentum at the Code and are in advanced discussion at the Artesian for more government leases in Germany. With over 60% of our portfolio now being index linked, this also drives uplift. The walk on the slide starts with our contracted rent of GBP 104,500,000.0.

Operator

The GBP 7,600,000.0 represents the value of current space that is being marketed. And as you can see, the vacancy is very concentrated to a few properties in The U. K, Partition, The Code and New Printing House Square, which are all in great Central London locations. We also have some vacancy left in two properties in Lyon that we have recently refurbished or upgraded. The EUR 5,800,000.0 of over rented space that we now have is an effect of recent indexations, which has driven rent above ERV, although a large part is in Spring Gardens, which is less relevant as it is a development opportunity.

Operator

Overall, this means we have an opportunity to drive rents to 116,300,000.0. In addition, we have a further SEK 15,200,000.0 of ERV in current refurbishments that takes the potential to SEK 131,500,000.0. On that, Debussy is pre let, and we're already in discussions for Gottig House. Capturing the upside from leasing activities is the largest opportunities to drive growth and earnings in the short to medium term. As you heard on the project slide, we also have some good opportunities for the future in the portfolio.

Operator

So on Page 25 to conclude, I'd like to finish with a few key takeaways. So firstly, leasing momentum continues to improve and although vacancy increased in the first half of the year from expiries, we expect to see improvements in the second half of the year. We have been executing on sales to reduce LTV and release funds for investments, and we are now 50% through the plan to sell mature assets for SEK 400,000,000. For obvious reasons, this will reduce short term earnings and we are completing on the letting opportunities. We have completed on over 90% of the refinancings for 2025 and now have a much more even distribution of maturities going forward.

Operator

We are investing in the portfolio and focusing on higher quality and faster growing properties. And finally, market fundamentals and sentiment are improving even if we expect the recovery to be gradual. And with that, I'd like to finish today's presentation. Thank you all for attending and listening in, and we will now open up for questions.

Speaker 2

Tim Lokey, Panmure, Liberum. Just a question one question for me. Sitting here today, Germany feels like in a much better position than it did twelve or even six months ago. I'm just wondering if you could point to any opportunities on the asset management side post Essen and Dortmund, which are currently underway. How you see Germany going forward?

Speaker 2

How much growth that could support from the portfolio? And what opportunities you have to leverage into that growth?

Operator

Certainly. I mean to start with, I think you're right. Germany feels like being in a better position than what we had certainly six months ago. So it's definitely going in the right direction, which is very reassuring. We do have a number of opportunities in the German portfolio.

Operator

You mentioned a couple of them. But I would also highlight Gottik House that we have just started the transformation for. Tenant left that one. It was severely under rented, and we're now progressing with that one. So that is one example of something that we have in a couple of years' time.

Speaker 2

The letting volume, the comments in the release and the presentation point to an improvement there. I think it was GBP 6,000,000 NRI under discussions in the second half, GBP 4.5 of that's additional income. Any comments on how confident you are of that? And is it a sign that we are seeing I mean, you kind of have already alluded to it, but we want to see those transactions finalized, timing on those through autumn. Do you think we could see some further announcements of signed deals?

Operator

Yes. We certainly hope that we will have some good news before the end of the year on many of these transactions. As you probably saw, a large part is in the artisan in Oldgate, which we have been working on all year to improve. So yes, I'm pretty confident that we will have some good news later on this year.

Speaker 2

Great. Thanks a lot.

Speaker 3

Hi, thanks. Good morning. It's Tom Wasson at Berenberg. I appreciate that there are still a lot of moving parts, but I just wonder if you can give an idea of where earnings may sort of in the end bottom out as you work through the disposal program.

Speaker 1

Yes, good question. So I'd say that in the first half of the year, the disposal of Spring New Student was pretty positive in that we managed to sell a building at book value 8% above 2023 values and that lowered LTV, lowered refinancing risk, lowered our cost of debt and was earnings accretive. Unfortunately, we can't do that every time, but we are desperately trying to. I think that the disposals that we've got coming up are probably going be slightly earnings dilutive. But the big opportunity, as Frederic's highlighted, is that 17,600,000 of vacancy.

Speaker 1

So that we'd hope would more than offset that. So I'd like to think that this year or maybe next year are trough at the levels that some of the market is expecting. And then we should be able to drive rental growth from there going forward.

Speaker 3

Thanks. That's helpful. And maybe just one more sort of it's indirectly on covenant headroom, but from the about GBP 64,000,000 of cash that you had at the period end, is any of that cash currently tied up sat on deposit effectively acting as an equity cure in some places? Or is all of that freely available to the group?

Speaker 1

No. So we have, I suppose, three different categories, freely available tenant deposits, and there's some that is there is equity cures. So the best example is where we have a tenant moves out, we sign up a new tenant and they have a rent free at the start. So the banks look at it on a cash basis, whereas from accounting, you smooth it. And so therefore, we will put a small amount of money on deposit initially while that rent free burns off and then it'll come back to us because then obviously the rent stabilized, its interest cover metrics, etcetera.

Speaker 1

The good thing is that on the whole, we are getting more interest on the money that is being deposited than we are paying because lots of those are older financings at lower rates and therefore actually it's benefiting us.

Speaker 3

That's helpful. Thank you.

Operator

All right. Well, if there's no more questions, thank you again for attending. And we wish you all a good day.

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