Q2 2020 FinVolution Group Earnings Call
Thank you for participating in second quarter <unk> earnings conference call for Symbolising growth.
This time all participants on this is only about.
After managements prepared remarks, therell be a question answer session.
This conference call is being recorded.
Now, let's try to cover story I was trying to Todd.
That's a relationship the company Jimmy Please go ahead.
Hello, everyone and welcome to all what's the kind of caught up any brand the earnings conference call. The company results, we should be on newswire services, a year to date and now posted online you called <unk>.
That's quite <unk> <unk> <unk> dot com.
We still think Jabil Cohen, <unk> steers, I'm, Oh, our Chief Financial Officer will start the call. We are prepared remarks, I conclude with a cure any sasha.
During this call we will be before into a certain non-GAAP financial measures to review and assess how operating performance.
Non-GAAP financial measure if I'm not intended to be close either isolation.
Did you put the financial information presented in accordance with U.S. gap.
Let me spend about these non-GAAP might just be constellation to get Madras piece or thought about wanting to press release before we continue be snow day. After day discussion will contain forward looking statements me under the Safe Harbor provisions of the U.S. purpose, a car district <unk> <unk>.
[music] opened to keep the American Bolton <unk> 70, assess the company results, maybe mckee ready different from the views expressed to be.
For the information regarding these and other risks and uncertainties, including the company's probably answered the U.S. Securities Exchange Commission. The company does not assume any obligations to update any forward looking statements, except as required under applicable law.
Finally, we posted a slide presentation on our outside providing detail. So far we sells for the quarter I will now turn to coal, but you always see old stuff on John. Please go ahead.
Hello, everyone and thank you for joining our second quarter Twentytwenty Unease conference call today.
We're pleased to report a healthy and solid results for the second.
That's a timely measures we took in response to the pandemic outbreak.
Sequence fragile economic recovery in China, it's getting all the second quarter.
Our unwavering focus on comprehensive Cardless controls.
The lingering uncertainty is due to call that 19, we remain agile in our operations with a prudent risk management coach Inc. second quarter.
Encouragingly numerous operating metrics showed improving trends in the second quarter in particular credit risk across our platform has further include sex to our continued investment in risk management technology I'll put into approach to risk management and our strategy to so better quality borrowers.
In terms of our most recent delinquency trends how they want delinquency rate in recent weeks. However for the improved to about 7.5% if you recall our previous earnings call.
How they want delinquency rate was 9.7% for the May period, and a 12.4% in the fourth quarter last year before Colgate 19 appeared.
Oh, so to date loan production recovery rate has further improved to about 88%, which is roughly 4% of your points higher than the levels in me on our last earnings call and also in the fourth quarter of 29 team.
These improving trends can be clearly seen in the delinquency data, providing our earnings release.
Delinquency performance for our first quarter Twentytwenty vintage is about 30% to 40% below levels, one year ago and at historically low levels.
Lastly, our vertical delinquency rates disclosed should improve.
Showed improvement quarter on quarter in almost all time as bucket.
And the improvement in particular is significant in the early stage delinquencies that is for loans that are 15 to 90 days past due especially early stage delinquency ratios have fallen back to levels at the end of last June September and this is that she would despite our total loan born loan balance can contracting bye.
30% to 40% compared to a year ago, which means that the underlying improvements in credit risk is actually larger than that because yes.
[noise]. These figures all showed that our credit risk profile today is significantly better than what it was before the call. It nine team and the buses our historical range. Thanks to our strategy to so better quality borrowers how continuous investment in risk assessments technology like our magic Miro technology system and I was.
Strongest management capabilities.
Another including try to in the quarter can be found in funding all powerful funding from Ali institutional partners continues to be stable and ample and with the shift to higher quality borrowers. We have seen keen interest by institutions to lens through our powerful well I'll pick focus this year has been on lowering.
Funding costs. We are pleased to report that the current costs have fallen from institutions have recently forward into around 8.5% compared to over 9% at the beginning of this year and over 10% off here.
Despite all the challenges in the first half over the Oh business operations remain resident and profitable thanks to our technological capability and the relentless focus on executing our plan and strategy.
Now, let me address the implications of the Supreme courts latest the decision to draw that rate cap on property lending to four times that off the loan prime rate.
It appears that the general understanding of the Supreme Court's decision is firstly.
Only a price will probably lending and not to license financial institutions and secondly, the cost rate caps seems to be defined Oh, a nominal 18 basis.
Although these cap seems to apply only to private attending and it seems the fourth quarter of 929 team all the fundings I'll I'll platform has been from institutions, we decided to move proactively and the swiftly after the Supreme Court's decision and adjust our cap on total borrowing for new loan originations too.
Pinpoint a 4% only nominal each up basis.
These proactive approach supports that rather freight direction for lower.
Lending rates.
The cap is equivalent to around 27% for our loan kinda profile and he is lower than the average borrowing costs previously I'll kind of fall, which prior to the adjustments was running at around 33% off.
To meet the cost rate cap, we will just couldn't you know service to some borrowers. However, we believe the vast majority of our customers roughly 90% can continue to be serviced profitably and our low volume guidance for third quarter, all 15 get into 16, getting RMB, representing an increase of.
15% to 22% over the second quarter.
Shows that we can and will continue to service the vast majority of our borrowers onto the new path.
Profitability will never inevitably be lower than before but as a result to of the grip progress we have made including this performance and operating efficiency in the POS yet we believe we will be able to continue to operate the business a profitable and sustainable way.
We have a number of levers to pull philosophy with a high quality part of the base credit risk will be lower and we expect the vintage of delinquency rates.
For.
These borrower profile to be below 4.5% secondary we expect a funding costs to further decline to below 8%. These targets I expect it to be reach by the end of this year and surgery, we will continue to drive operating efficiency.
In addition, we will also cap rates more closely with our institutional partners tweaks ball capitalize lending models, the significantly improved credit profiles of our borrowers and all strong technological capabilities make this new model an attractive proposition to our institutional partners.
Our family and successful transition of funding all platform from P to P to institutions demonstrates our agility and the cost stress you know technology and the management capability.
Let me now update you on where we own PDP Outback book of Pete will be funded loans have shrunk to 2 million IB in July so effectively non <unk>.
So effectively P to P is not a hindrance false anymore.
Finally, let me update you all other strategic initiatives in particularly.
How are we are leveraging our technology technology capabilities to enable businesses in financial services. Our international business is one example, with Indonesia as our earliest and the most developed the international market all pushes that was severely affected by the pandemic, especially between February and to me.
But as the Indonesia <unk> economy, we opened we have seen some very encouraging signs of recovery and we're pleased to report delinquency rates and low volumes, you know Indonesia business back to levels at the start of the yet.
We also continue to leverage our technology and the operational experience between coal banks and the financial institutions in their consumer finance operations, we expect an increasing number of institutional pump condos to deploy all technologies.
Another example of how we're leveraging our technology is our new wealth management business. Some of you for individual investors all platform.
Yes. They may have received text messages about our wealth management offering called it the antifungal Oh I Fortune English.
Our new wealth management business focuses on servicing this huge mass affluent segment in China, drawing on our technology and extensive experience in acquiring customers online and in serving retail investors. We're confident in our ability to succeed in this new business initiative.
Although the worst over the pandemic seems to be behind us, especially in China, We will remain vigilant towards the lingering risk from call. It 90, given that the situation internationally is still fairly severe with a long and a proven track record in technology innovation, and the managing risk prudency and responsibly through credit and economic cycle.
We believe our innovative and the vigorous culture will enable us to navigate challenges unlock and unlock the vast potential in China is enormous consumer finance and the thing Tech markets.
With that I would now turn the call over to our CFO, Simon Hope, who will discuss our financial results for the portal.
Thank you phone and Hello, everyone.
In the second quarter.
Despite the challenging cobot 19 environments, we delivered non-GAAP operating profit of 576 million RMB, representing in sequential quarter on quarter increase of 24.2%.
Sure the demonstrating be sustained profitability of our core business model, our balance sheet and liquidity remained strong with 3.4 billion RMB and unrestricted cash and short term liquidity.
Leveraging on our strong technology, we look to capture new opportunities and expand our relationships with business partners.
Now turning to the financial results for the second quarter and the interest of time I would not walk through each item line by line on this call. Please refer to our earnings release for more details.
Revenue for the second quarter of 2020 increased by 10.3% to approximately 1.8 billion RMB from 1.6 billion RMB and the same period of 29 T. Primarily due to the adoption of S. C three to six.
Loan facilitation service fees decreased by 57% to 405 million R&D for the second quarter on 2020 from 914 million RMB and the same period of 2019, primarily due to the decline in loan origination volume and a decrease in the average rate of transaction sheets.
Post facilitation service fees decreased by 52% to 100 153 million R&D for the second quarter of Twentytwenty from 316 million RMB sustained period of 2019, primarily due to decline in outstanding loans serviced by the company and the rolling impact.
Deferred transaction fees.
Net interest income was 333 million RMB compared to 274 million RMB and the same period of 2019, mainly due to the increased interest income from expansion of outstanding loan balances of consolidated Trust.
On T. income was 821 million R&D for the second quarter of Twentytwenty due to the adoption of S. C three to six.
Non-GAAP adjusted operating profit, which excludes share based compensation expenses before tax was 576 million R&D for the second quarter of 2020.
Representing a decrease of 26% from 779 million RMB and the same period of 29.
Other income increased by 24% to 34 million RMB for the second quarter of 2020, compared with 28 million RMB and the same period up 2019, primarily due to government subsidies.
Net profit was 454 million R&D for the second quarter of 2020 compared to 661 million RMB and the same period up 29 team.
Turning to the balance sheet.
We have a solid and conservatively positioned balance sheet in particular, our cash position remained strong with approximately 3.4 billion RMB unrestricted cash and short term investments as at the end of June 2020.
I also want to make two additional points about our balance sheet first our capital leverage is conservative if you compare the total outstanding loans on our platform up 21 billion RMB by our shareholders' equity the leverage ratio across the business was only 2.8 types second.
Credit risks are well be Sir you have 2 billion RMB unrestricted cash set aside specifically to cover quality assurance protection at guarantees given to our institutional funding partners. This restricted cash alone just about fully covers the expected credit losses from such guarantees which were.
2.1 billion RMB.
On top of this restricted cash we also have 1.3 billion RMB quality assurance receivables that will be available from borrowers as baby pay to cover such credit risks.
We have continued to buyback of shares between May Twentytwenty and August Twentytwenty, we repurchased approximately 15.1 billion adss as of August 24th 2020, we have cumulatively deployed approximately 111 billion U.S. dollar to repurchase to come.
<unk>, yes, since the amount we purchased it's close to the prior authorized amount of 120 million U.S. dollars.
Board has approved a new share repurchase program 60 million U.S. dollar, bringing the cumulative value of absent the can be bought back fall through our share repurchase programs up to $180 million.
In closing with strong technology management capabilities, and a conservative balance sheet.
Dilution is well positioned to adjust to the new environment and develop a sustainable business for the long term.
That I will conclude my prepared remarks.
We will now open the call two questions operator, please continue.
Yes, just thank you well now begin the question and answer session.
I'll ask your question in My Press Star then one on your Touchtone phone.
If you are using speakerphone, please pick up your handset before pressing the keys.
Try your question. Please press Star then too.
<unk> expense on todays call distinguish us your question into management and Chinese mess you. Please kindly repeat your question in English.
Baseball's I'm always somebody roster.
As a first question comes from Alex you with your yes.
Oh, Hi Tech what they mean amendment thanks for taking my question.
So my first question.
On the new Oh.
Interest rate caps, so given them.
The new.
50.4, I know me I'll be quick, but some kind of 10% <unk>.
Could you share, but it's not what the current portion of a new loan that plays a above and below that that cap.
And so you mentioned that you are now moving to run to never want to metal Threed <unk> been a quality cosmos. So could you also show based on what's the pricing levels well what those that have critique. That's my you I couldn't be savi.
Desperate restaurant and second question is on a related to that so do you see any ability to cheese, we got I think corky lately over the past few update option at the new interest rate cap new.
Given some.
Oh lets me may decide that they do not need to repeat that that that that that's about the cap.
And my last question based on your loan growth Oh look so keep and we are on the good track too.
Be improving ethic rutile when would you be more comfortable a comfortable to assume a better growth going forward. Thanks.
Sure.
Thanks, Alex for your questions.
Actually as we as Phil mentioned on the call on his part just now.
Prior to Oh, the Supreme Court decision, our average I, our our was running at 33% and this consists. This is the average blended number but about we were running roughly in a browned at that point around 20% off our loan originations where price.
That 24% or are we.
We've been working to increase the percentage of 24% IR, our loans and our original plan was to further increase that's going forward.
But of course, the Supreme Court decision accelerated those plans, obviously fairly rapidly as a result.
So we were pretty much along that path are already.
And essentially obviously the loans that we for the for the customers that we continued to service the pricing for those that we will continue to service will have to be.
Adjusted in line with the 54%, 15.4% nominally PR limit.
So that's the the first question. The second question, it's fairly simple have we seen any sort of volatility in delinquencies in credit risks and the answer is no. We haven't seen detected any shoesmith ER, which credit risk.
At the moment at all and finally your question on the.
Loan volume outlook now.
Because I just want to mention because of the adjustments we are making a right. After the Supreme Court so decisions.
Our loan volume in September will come down moderately versus August because it sounds that you know, we're not servicing 100% of all the customers.
Our plan is to one at this level for the fourth quarter, let the business fully adjust so this could mean that fourth quarter loan volume could be flat to slightly below the third quarter, but our goal is to use the time, we have and the rest of the year to fully get just to this new environment and start 2021 on a clean slate and that resumed growth.
So that's our plan I hope that that answers your questions Alex.
Sure sure exactly venture.
Thank you and the next question costs and stuff and the problem with Citi.
Hi, Good evening management.
And so taking my question. So my question is.
Although we got.
[laughter] role.
Yes can you.
Okay.
You are pricing radio low what.
Oh, that's true.
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And also in times of the.
Hi, Thanks.
Great.
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Hi, guys going for what you will narrow.
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Oh sure.
Yes.
And also so you mentioned.
Most of your borrowers.
Yes, I can you continue to be stuff.
Neil.
If you have so just wondering does that means that that she is the.
Try doing.
Too much these borrowers.
I mean, it's.
Mostly the same cool.
That does that means that credit costs will not come back.
I smashed <unk>, well be where they see much if people and.
And also.
All questions regarding go Oh longer time pardon.
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You seem like <unk>.
Ah yes.
Sure.
Thank you.
Sure. Thanks, Stephanie.
Oh, sorry, great questions I think firstly, you know on the take rates.
So that's why I in the first half of 2020, our take rate was relatively stable throughout that was running at about 4.4%.
As we have mentioned another new limits the profitability will inevitably be lower but we will have room to improve on credit risk funding cost and operating efficiency unite I think with the forward guidance that some games, which as you know by the end of the year funding cost below age vintage delinquency.
Below four and a half you can get a pretty good sense of the potential economics.
And that were thinking off and that our business can and will continue to operate profitably.
But I do want to warn that this is not a static exercise that this is very dynamic there are obviously several parts that are adjusting at the same time and the end result, so very very much dependent on our own efforts and our you know our management team and we will strive to continuously.
Improved and drive the profitability.
And Ah I think going into next year. Obviously, you know we will looks you try and improved those metrics even further.
And Ah if you've looked at how will you transition from the PDP business over to the institutional funds. We do have a I think we do have a clear track record of you know managing such proceeds.
In terms of.
Oh no question about whether we're charging overcharging no customers I think it's all a bit dynamic again, because what we have found and if you just compare the the or what we said in the May earnings call about credit risk.
And what we are standing now I think the first half of the year overall has been it has turned out to be you know far better than we expected on the credit risk side.
So if you if you look at.
You know in May we were saying that second half vintage delinquency rates could be around six now we're saying you know for now by the end of this year. So I think that's really the gap I think you know it's again, it's all a moving process and beach, what we found is that actually the.
The risk of our borrow basis is is lower than we had expected.
And ER and long term credit cost outlook is as I said look for enhanced by the end of this year and and depending on the profile I think we'd like to we'd like to do better if we can.
Yeah, I I just add that.
Well, we're optimistic that in the long term.
To the risk profile the vintage it didn't quizard rate will be even better than the 4.5 guidance number we put out there.
You know I think definitely for a long enough and Oh, you know you know we had rabbit could put it started to track record of being.
Relatively conservative in our last guidance on that front.
[laughter].
Right.
Maybe just one follow up also on the call.
HM.
Well.
It was.
<unk>.
Oh yeah.
Look I feel Hyatt.
Yes, yes, I'm just wondering.
Yes.
Uh huh.
Yeah definitely thanks for that I think.
One of the one of the results of that is so we have we have been relatively quite conservative during the last you know the last six months six nine months.
And our loan origination volume has come off I think a lot of the this sort of the cost concerns that you're flagging is related to our our you know how conservatism imprudence over the last six to nine months.
Our loan balance that's why I.
Would have declined about 30% to 40% versus one year ago. So I think once we adjust to the new environments and we resumed growth I believe you will definitely see quite a fair amount of operating.
Cost improvement coming through.
And we obviously, we will continue to drive work to improve operating efficiency using you know the various technologies, we have particularly you know.
We continue to optimize it particularly a lot of the.
More labor intensive functions and the company like collections et cetera, So I think beverage definite boom.
For us to improve on that front as well.
Okay.
[laughter].
Thank you.
Once again, please press Star then one if you would like to ask a question.
And the next question comes from Jackie's Wall with China Renaissance.
Oh, Good evening mentioned, thanks for taking my question, just Oh, Philip catch on regulation.
So from my understanding the Sixtym called actually you should be documents in October lots here, saying that.
The I are about 36%, Oh, well be illegal so will that coconuts do badly from your end ending so how do we view for the for the loan pricing a ball picking up 4% HCR and below 36%.
And I are so bad branch, but will you.
Do you consider continue doing that branch if not maybe another follow up question is oh. So so what do you think about that.
You know pricing wrenching.
Thank you everyone. He sees a exiting that I think range or do you see some contingency reserves from Oh. These segmental borrowers he did no credit a supply could thank you.
Jackie Thanks for your question I think the answer is fairly simple and as we laid out.
On the call Oh, we have moved selling very swiftly after the Supreme Court's decision to cap all of our new originations on the platform to the 15.4% nominal NPR. So that's what we're doing we are not going to be as far as we know today.
We're not operating up to the 36% I our limits, obviously, unless we have very concrete and very firm legal opinion that that itself pretty possible. So as of today, we have kept all of our new originations at 15.4%.
PR nominally PR level.
Now.
With regards to you know what what happens if there are other people lending between that you know below 36, I, our but above 15.4% a PR I think that is that I think getting better off I ask the lawyer [laughter] you know, we're not we're not planning to.
Operating that at this point, but I think I think they might be some time required to sort of oh for for these these these full opinions and you know to come out now.
We mentioned, we haven't seen any issues with <unk> with credit risk.
But you know to be honest, even even if they when there was that I <unk>, 36% I R. R.
Or you know requirement actually as you as you probably know and you know the sector pretty well there are still you know many players out there that do 36% nominally team [laughter], which is much higher than 36% IR. So you know that there will always be other people out there yet so that that will take that today.
No risk I think but no, but we're not and we are we are you know we're very focused on compliance within the company. So we're very strict on this.
Thanks.
Yes, maybe a follow up so are there new loans originated you mentioned you plan to do 15 full sensor HCR <unk>.
It's his team boards, probably price at higher than than that price currently.
So how soon you offered this a cheaper price loan to them all would be that you know that's like current currency incidentally or like what's called or this year.
So Jackie where where were applying this new rate cap on all new loan originations right. So I think if a borrower has an outstanding loan that is above that that was obviously made prior to the Supreme Court decisions and I think that we'll continue to stay.
And then for all of the new originations that we facilitate.
It will be based on the it won't be kept up that new level.
I would just add that would include that will include you draw downs from existing borrowers or if they have a additional credit on.
So he essence, you know from your say no to up the center to up the decision or all the of the loans, we issue either fall completely new customers awful lot uses its customers you draw down on will be kept at a 15.4 nominally John.
I want to be very early on that.
Got it thanks to thank so much.
Okay.
Thank you.
And once again. Please press Star then one if you would like to ask a question.
And then ask question comes on your runs young with credit Suisse.
Hi, Good morning, I'm, sorry that good evening management I, just a follow up.
Youre customized position as you know you continued up where ya.
I think given you know the calling conservative origination volume it seems you're sticking with existing customers for now with very high repeat borrowing rate and no new customer acquisition.
But going forward, what's your customer acquisition strategy, you know when you do decide to be more aggressive to ramp up your about volume and do expect a more intense.
Competitive medscape in the new how can they force that men you know compare to your previous well okay. Thank you.
Thanks here.
I think you're right I mean, if you look at you're right in some respect that we we we service a lot of existing customers and I think that is.
In part because we've we've been more conservative, but but also we have a large pool they existing customers as well a very large base.
We have not for we have not completely.
Stopped new customer acquisition at all at any time in point this year.
It has been less but actually lately it has been actually picking up.
And well then they exist or the new customers, we acquired in the markets.
A significant percentage has been in the how the higher quality segment. The 24% I are our segment in fact, so I think.
A likely scenario is that we will probably run roughly speaking, 15% evolving with customers.
85% existing I mean, that's been roughly where things have been over the last 12 months and I think that's all that the norm for the for the time being.
Until we fully adjusted business. So we will continue to acquire Oh, we have been and we will continue to acquire new customers and we are acquiring in the higher quality segment. Okay. So this is not a new thing for us at all.
And if you sort of calculate our acquisition costs from the borrower they have been drifting up and this is a reflection.
What we're doing on the acquisition funk and the trend will I think bill will continue.
And.
And I think we will oh, but but overall I think.
You know acquisition cost.
The higher acquisition costs for these new segment is paid for by the better quality, the lower credit risk and we will also and the ticket size will also be somewhat larger than in the past of course someone who is much better credentials don't want to be borrowing just to 3000 RMB. So.
So you see these trends I think progressing going forward.
Our acquisition strategy as a result, I think it's gonna be a an ongoing optimization and gradually improve ongoing improvements.
You know, we have mainly been relying on a range of social media platforms information feeds and on an advertising.
And people continue to optimize and expand these channels to reach the our target segment.
We so far in our efforts to acquire customers in this new segment.
We actually Havent come across you know competition that is not manageable I think there will always be competition I think we're pretty confident that we could we could we could we could you know be acquiring at the volumes that we need in the segment.
Okay. Thank you.
Thank you and the next question comes to Steven Chan with Titan International.
Pretty evenly management two quick question.
Oh foods warm.
We heard about you know a you quite confident about knowing funding calls.
Improving operating efficiency and then.
The delinquency still plays on your newest scenario won't <unk>.
We all feel breakeven point that means that the breakeven lending rate and a you'll you'll Neil persistent no real Oh. The Twentys say for example, you mentioned about you know 24% automobile customers.
Are those customers, but couldn't topic. So a this is my first question second question. It's about you mentioned about the wealth management business. So so could you elaborate more on a BOE this new business well some of license I I are you getting on.
Is it legal team to sell wealth management called us on.
On the Internet platform. So basically these two questions.
Hi, Stephen Thanks, you for your questions.
Firstly, a up the I R 24% level those customers all profitable otherwise wouldn't be operating in that space at all they are profitable and had been rising as a percentage of our business.
And in terms of your question about breakeven rate, it's it's again I I don't.
I want to directly give a risk given number and that's it because as I said. This is a profitability is not a static exercise it's actually dynamic dynamic process right. So you can't say look on your spreadsheet you know funding cost is fixed and then credit risk is fixed and then just lowered the yield.
And then it goes to zero right clearly if it goes down too fast and yes.
You know.
If the viewed goes down quality goes up right risk goes down and funding costs potentially will also go down because they're all actually into related at the same time. So I think we'll we'll leave it at that at this stage and clearly if you want it to go into more do you tell us a we'd be very happy to.
Sit down and walk you through in more details on that on that topic.
In terms of the wealth management business.
I.
I think you know just to just to give you some color on what we're doing first of all you know.
<unk>.
We we think the wealth management market in China is huge, particularly the mass affluent sector.
We have natural synergies to do this because we are leveraging again an hour the technologies we have.
And we have also very good experience in servicing be told investors, which we gained back in the PDP days.
As of I think that's off as a as of right. Now we we have had about 1.4 billion oak investment facilitated through L. by Fortune.
And Ah, it's still early days, but we will provide updates as our.
Business develops the model itself is we're not a manufacturer we're not an asset manufacturer. We are in a sense we are.
We are we are we are introducing customers introducing traffic to our partners. The partners who are obviously selling these bodies products.
So actually you know.
If you open up the App or go to the other by Fortune a website you see that for example bank deposits is one area that we are actually then.
And you don't need a license to be distributing back we are actually just referring customers to the banks.
And for fun sales, we are at the moment partnering with a third party company that has a strong distribution license. So.
The business. This the business that we're doing is fully compliant.
And there are where there are no regulatory issues around our business model.
Yeah, I hope that helps to answer your question Stephen.
Andrew Thank you very true sense.
Thank you.
And once again. Please press Star then one if you would like to ask a question.
Once more pressing star and then one will allow you to ask a question.
Okay.
As there are no further questions now, let's turn call back over to the company for closing remarks.
Okay. Thank you once again for joining us today.
No further questions speaks to feed your contract in pollution Investor Relations team and you're not everybody and happy Valentine's day.
Thank you [laughter]. This conference call you may now disconnect your lines. Thank you.
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