Welcome to the bpost First Quarter 2023 Analyst Call. My name is George, I'll be your coordinator for today's event. Please note, this conference is being recorded, and for the duration of the call, your lines will be in listen-only mode. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad to register your question. If you require assistance at any point, please press star zero and you will be connected to an operator. I'll turn the call over to your host, Mr. Philippe Dartienne, CEO ad interim, to begin today's conference. Please go ahead, sir. Thank you very much, George. Good morning, ladies and gentlemen. Welcome. I am pleased to present our First Quarter 2023 Result as CEO ad interim of bpostgroup. Welcome to all of you, and thank you for joining us. With me, I have Koen Aelterman, our CFO ad interim, as well as Antoine Lebecq from Investor Relations. We posted the materials on our website last night. We will walk you through the presentation and we'll then take your questions. Two questions each will ensure everyone gets a chance to be addressed in the upcoming hour. Before getting to our first quarter results, I would like to take the time to update you on the events of last week, as well as on the press concession. On the preliminary results of the compliance review of the service provided to the Belgian State and the withdrawal last week of our financial guidance for 2023. Following the internal compliance review relating to the ongoing and future press concession, bpost requested its head of compliance and data protection, and head of corporate audit to conduct further internal compliance reviews relating to other tenders and public contracts with Federal Government. The board of directors was informed on the preliminary results of these compliance reviews, which remain ongoing, and which revealed that bpostgroup's margin on certain services provided to the Belgian State may not be acceptable under applicable laws, and that certain of those services may not have been awarded in accordance with applicable laws. As a result, you saw last week that it led our company to withdraw its full year 2023 financial guidance and, pending further legal and financial analysis, preliminary estimates indicate a negative adjusted EBIT impact between EUR 25 million-EUR 50 million on our guidance in relation to the performance of these services in 2023. We can today indicate that the relevant services in scope will relate to three distinct contracts or concessions. Namely, number 1, the traffic fines, which consists in handling the financial and administrative processing of the fines for the Federal Public Services of Justice. Second, the cashier function of the Belgian Federal Authority, or the contract with the Federal Public Service of Finance for the so-called 679 bank accounts, consisting in the provision and the management of the payment account system and the provision of the payment service to more than 200 public institutions to date. Third contract, the concession of public service for the manufacturing and the delivery of European license plate and associated documents for the Federal Public Service of Mobility and Transport. As you can see on Slide 3, the total annual value of these services amounted to EUR 104 million in 2022. While the services relating to the 679 bank account has been provided since 1912, other contracts are more recent. Each of these contracts or concession varies by its own characteristics. Pending further legal and financial analysis, bpost is at this stage not able to provide more information on the financial impacts in relation to past revenues. Depending on each contract, this financial impact would depend on many factors, including on one hand, if and to which extent there is or was an overcompensation, taking into account the applicable regulatory framework, including notably State Aid rules. Tender processes, costs related to the service, the amount of the margin acceptable under applicable laws, the revenue charged for the relevant services and the duration of the relevant services. On the other hand, whether or not and which action the competent authorities would take and the outcome thereof. Noting that the Belgian government has indicated that it would audit the compensation paid for the services provided by bpost. This is today all we could share with you on these matters, and what we have done so far. We will provide more detailed information as soon as possible. For the sake of clarity. The impact of these preliminary findings of the compliance review are already reflected in our Q1 results, as we recognize at Belgium level a revenue impact of minus EUR 6.2 million, which correspond to one fourth of the low end of the EUR 25 million-EUR 50 million impact for 2023. Let me now update you on the press concession and the latest developments since our Q4 presentation two months ago, which you could find on Page 4. First, I share with you last time the Belgian government decided to extend the ongoing concession until the end of 2023. The submission of this extension to the European Commission for approval on the State Aid rules is progressing following the standard process. Second, some of you are wondering whether or not the recent event of last week could have an impact on the ongoing investigation of the Belgian Competition Authority. The ongoing internal compliance review of the services provided to the Belgian State, which I discussed, is a separate process relating to different contracts and different causes. There is no link with the external investigation of the BCA. We can reaffirm today that subject to further findings on the ongoing BCA investigation, the risk of imposition of a fine is still assessed as possible, but not probable. Our view on the probability or the amount of such a potential fine remains unchanged. bpost has not taken a provision related to these matters. The Belgian government announced on February 1st, 2023, its intention to conduct a governmental audit into the compensation for the current press concession in order to determine if there was any potential overcompensation. This audit has not started yet. We did not receive any information regarding the scope of this audit. Any findings and overcompensation could lead, among others, to a claim for reimbursement of a part of the revenue chart for the services. We are still, at this stage, unable to assess the risk associated to these audits. As said earlier, the costs associated to distribution services were reviewed and scrutinized on an ex-ante basis in the context of European Commission State Aid review and on an ex-post basis by the Collège des Commissaires as part of the annual approval of our accounts. Regarding our capacity to participate in tendering procedures, we are still of the advice that contracting authorities would consider that bpost has demonstrated its reliability in the context of this investigation and reviews, and would therefore allow bpost to participate in ongoing and future tendering procedures. Third and last point, what about the future press concessions? The government launched recently a new tender for the period 2024-2028. In line with its initial intention to reduce the annual budget attributed to the concession, the government reduced the envelope down to EUR 125 million and has adapted the tender specification in function of this lower budget. The deadline to submit our offer is early June, and an award decision is to be expected before the end of this year. bpost is currently assessing the RFP and its requirement and whether an offer can be submitted that is financially sound. bpost still judges itself well-placed to win such a tender process. To conclude on this topic, bpost has been caught up by some elements of the past, we are taking all necessary measures to get to the bottom of these matters. We will continue to work tirelessly to earn and maintain the trust in bpost and its employees. I am confident that by continuing to prioritize compliance, we will emerge from this situation stronger and more resilient than ever. In the meantime, and as per our first quarter, we continue to execute on our strategy and to progress on our growth and transformation plan. On Page 5, I am indeed pleased to report that despite challenging macroeconomic conditions, bpost Group performed well this quarter, achieving good operational execution and top-line development, with the performance even slightly exceeding the plan. Supported by strong parcels volume and price increases, our group operating income for Q1 stood at EUR 1,049 million, an increase by 1% or EUR 10 million, including the negative EUR 6.3 million revenue impact I just mentioned. Excluding this impact, this would have been an increase of +1.6 million% or EUR 17 million. Our group adjusted EBIT stood at EUR 78 million with a margin of 7.4% or EUR 84 million before the revenue correction. Unfortunately, due to inflationary pressures on costs and macroeconomic trends, EBIT was down year-over-year. Our continued focus on productivity and cost control has borne fruit, and the decline in operating EBIT remains limited. I would like now to hand over to Koen for more details on the financial of this first quarter. Koen, the floor is yours. Thank you, Philippe. Good morning, everyone. On Page 6, as always, you can find an overview of the key financials for the quarter, both reported and adjusted. Philippe already mentioned our group top line in EBIT. Our adjusted net profit amounts to EUR 48.3 million or EUR 53 million before the revenue correction, including some higher financial costs related to IAS 19 employee benefits and FX changes, thus non-cash impacts. Allow me to move directly to the details of Belgium on Page 7. At Belgium, when excluding the impact of Ubiway, we see that revenues increased by EUR 20 million to EUR 577 million. Domestic mails recorded an underlying mail volume decline of 8.8% for the quarter, against 5.4% in the first quarter of 2022. This impacted revenues by minus 28 million EUR, yet mitigated by positive price and mix impact of plus 25 million EUR, as well as 4 million EUR of additional revenues from Aldipress, which was acquired on September 30th of last year. Altogether, domestic mail revenues remained nearly stable year-over-year. Note that the transactional mail revenues were in the first quarter of 2022, still supported by the COVID-19 communications, with an impact of around 5 million EUR. This was no longer the case in 2023. In advertising mail, continued market pressures, among others from high paper prices, were in this quarter further reinforced by a customer bankruptcy. Parcels Belgium recorded an increase of 15 million EUR in revenue or plus 13.9%. Parcel volumes increased by 9.1% year-over-year, with a higher growth in March, as March last year was marked by the start of the war in Ukraine and Amazon's insourcing was reaching its steady state. The volume trend in this quarter was mainly supported by our successful Commercial Hunting Plan of 2022. It should be noted that this volume growth occurred under persisting unfavorable macro market conditions. In Belgium, online retail sales, adjusted for inflation, declined by 12% and 16% year-over-year in January and February, respectively. While the consumer confidence index was still positive last year, before the start of the war in Ukraine, the consumer confidence in Q1 of 2023 remained negative, despite a slight improvement since the end of last year. Price mix stood at 4.9% in Q1, mainly driven by price increases. Proximity and convenience retail network revenues increased organically by EUR 3.4 million following the indexation of the management contract. In this subsegment, the deconsolidation impact of Ubiway, as from the month of March, was -EUR 21.6 million in the quarter. Value-added services increased by EUR 5 million, mostly resulting from higher revenue from Fines solution. Let's move to the PNL of Belgium on Page 8. In our intersegment and other operating income, you will see the -EUR 6.25 million impact reflecting the preliminary findings of the ongoing compliance review, as just explained by Philippe. On the cost side, again excluding Ubiway, operating expenses increased by EUR 30 million year-over-year, mainly due to persisting inflationary pressures. We have indeed recorded higher payroll costs with, on the one hand, more than 11% of salary indexation impact year-over-year, on the other hand, a 2% reduction in FTEs. This reduction of around 480 FTEs year-over-year, again excluding Ubiway, reflects our continued focus on productivity, also the higher parcel volumes this year. Besides our payroll costs, OpEx development was also driven by some other inflation-driven cost increases, such as rents and energy costs. Bottom line, excluding the impact of the compliance review, our EBIT decline remains limited as inflationary pressures are successfully mitigated by our top-line development and our efforts on productivity. Moving on to E-Logistics Eurasia on Page 9. Revenues were up EUR 21 million, reflecting strong growth across the different subsegments. In e-commerce logistics, revenues increased by EUR 6.7 million. Radial Europe and Active Ants sales were up +19.6% year-over-year. This continued high growth is driven by our existing customers expansion and by new customer onboardings. At Dyna, the revenue development reflects lower volumes in Dynalogic's delivery network, offset by price indexations across all Dyna lines, as well as more services or more devices to be repaired at Dynafix. Cross-border revenues increased by EUR 14 million or +18.9%. This top line development is driven by both the consolidation of IMX since July last year and the growth of our Asian sales, where despite softer underlying trends, we continue to see the benefits of some recent customer wins. Let's move to the P&L of Eurasia. Operating expenses increased by EUR 25 million or 18.5%, mainly explained by higher transport costs in line with growth in fulfillment and cross-border activities and the integration of IMX. Higher payroll costs from inflation and e-commerce logistics growth, as well as some expansion and strategy-related expenses in this quarter. Looking at our EBIT margin development with 4.7% in Q1, we see sequential improvement compared to our margins of around 3% in the third and fourth quarters of 2022. Moving on to our North America e-logistics business on Page 11. In line with expectations, our top line development in North America is currently impacted by the economic softness, the market overcapacity leading to high degree of competition and pricing pressures, as well as Amazon's insourcing impacting Landmark. The operating income of e-commerce logistics slightly decreased by 1.7% or EUR 6 million. At constant exchange rate, this would correspond to a decrease of -5.8%. At Radial, top line decreased by 4.1% year-over-year, reflecting two dynamics. On the one hand, we see the contribution of some new customer launches as well as some slightly higher sales from existing customers. On the other hand, we also have the impact of some terminated contracts as discussed last year already. At Landmark, as anticipated, we recorded lower revenues due to Amazon's insourcing and general price pressures in the market. Moving to the P&L on Slide 12. Alongside our total operating income, OpEx and D&A decreased by 5.4% excluding FX impacts. Variable OpEx evolved in line with revenue development and were notably supported by continued strong variable labor management and productivity gains, as well as a favorable wage rate impact. In overhead, we reduced FTEs by 2.3% compared to last year. Here as well, thanks to a strong focus on productivity and cost management, we've been able to maintain our EBIT and to protect our margins in challenging market conditions marked by overcapacity and economic softness. Radial continues to improve profits and contributes to the stable EBIT in North America. Moving then to the corporate segment on Page 13. External operating income increased by EUR 2 million year-over-year from higher building sales. More importantly, though, OpEx and D&A increased by EUR 9.9 million or 9.1%, reflecting inflationary pressure, notably on payroll costs, with more than 11% of salary indexation, as just discussed also for the Belgium segment, partially offset by a reduction of 5.9% in overhead FTEs as part of our mitigating actions. We move to the cash flow on Slide 14. The main items to flag here are the following. Cash flow from operating activities before changes in working capital decreased year-over-year in line with our result development. Change in working capital and provisions increased by EUR 125 million. As explained in the previous quarter, this is notably due to the compensation schedule of the management contract for a net positive impact of EUR 78 million. This includes the final settlement of the 2021 compensation, which was received in Q1 of 2022, versus in Q4 of 2022 for the 2022 compensation. More importantly, the advance payment for the 2023 compensation, which was received in Q1 of 2023 versus Q4 of 2022. Compared to previous year, lower CapEx and lower peak expenses of the fourth quarter of 2022 also contributed positively to the change in working capital in Q1. Altogether, these impacts were partially offset by the deferral into this quarter of the Q4 2022 payment of the payroll withholding tax for EUR 31 million. As explained already when we discussed the Q4 re-results, we made use of a measure granted by the Belgian government in the context of the energy crisis. The cash outflow from investing activities amounted to EUR 54 million, mainly driven by our CapEx and including the purchase of two logistic sites for Radial US in line with the CapEx guidance. I now hand back over to Philippe. Thank you, Koen. Before moving to the Q&A, I would like to reaffirm that our operational performance in the first quarter was strong and even slightly above plan. Unfortunately, bpost is caught up today by some element of the past and had to withdraw its financial guidance for 2023. Please note, however, that from an operational standpoint, the underlying parameters of the initial guidance remain globally intact, and we continue to deliver on plan. Visibility on financial impact of the compliance review is at this stage limited, but we strive to get a clear and exhaustive view of the financial impact so as to reinstate an updated guidance for 2023 as soon as possible. As illustrated on Slide 3, each of the contracts in scope has its own specificities, and the factors on the review are also of different natures. The timing of this complex process, which will involve external parties to bpost, therefore remain uncertain. We are conscious of the uncertainty caused by the situation, but be assured that we will update you on these matters if and when appropriate. We are now ready to take your question. Operator, please open the line. Most certainly, sir. Ladies and gentlemen, as a reminder, if you have any questions, please press star one at this time. First question today will be coming from Paul Kijianowski[Kianovos] from Bank of America. Please go ahead, sir. Hi, good morning. Paul Kijianowski[Kianovos] in place of Muniba Khan from Bank of America. two questions from my side. Could you talk about the current state of competition you're seeing in the market, and is price still the main mechanism that competitors use against you? My second question is, in Belgium parcel volumes, there's outperformance versus expectations, driven partly by the hunting plan. Could you describe what contribution came from the hunting plan versus the organic portion of this? Thank you. Thank you, Paul. Starting perhaps with the first question, the current state of competition. We need to distinguish across our different businesses, and let me perhaps start with the U.S., where we see indeed that the market is very challenging at this moment. There is in general, an overcapacity in the market with many players having invested during COVID, in order to have more capacity. Right now, with the post-COVID normalization, further, and further impacted by the difficult macroeconomic conditions, we see that that capacity at the moment is not required. Hence, we see indeed a lot of price pressure in that market. Obviously that has an impact on us, but we don't intend to compete just on price. I think that's the same effect for the US as for Belgium. We want to compete also on the quality of the services, the expertise we bring, notably in the US, in the verticals in which we are active. We think that that is still a differentiator despite the increased price pressure, which is indeed the reality today. In Belgium for the moment, we see less of that price pressure. Here the competitive situation is, I would say, pretty much unchanged compared to last year. On your second question, the parcel volumes and how much is coming from the hunting plan versus sort of structural growth in the market. To some extent it's a bit difficult to say based on the Q1 results because Q1, first of all, last year, the start of the war in Ukraine with all of the resulting impacts, on inflation, on energy prices and so on, it was something which happened sort of middle in the quarter, so it's difficult to make a like for like comparison. If we look at the growth we see, sort of excluding the new customers we onboarded as part of the Commercial Hunting Plan, we would estimate the market growth, which is in the low-single-digit range, which means that the rest in essence, we expect to come from the Commercial Hunting Plan. Thank you very much, sir. Our next question is coming from Frank Claassen, calling from Degroof Petercam. Please go ahead. Yes, good morning, Frank Claassen, Degroof Petercam. Two questions please. First of all, on the press concession tender, what if you don't win the new tender? What is your, let's say, plan B? What can you do if you don't win that tender? Secondly, on the labor cost in Belgium, how many steps do you think there are still to go on the inflation correction, automatic inflation compensation? How much higher could the labor cost be in 2023 versus 2022? I saw that in Q1 it was up 11%. Will that accelerate in the year or? Yeah, some explanation on that please. Thank you. Let's start with the labor cost. The labor cost in Belgium, as you know, the evolution of the labor cost in Belgium is resulting from a law which is applicable since many years. whereby there is an automatic inflation- Yes. Based on indices, with basket of costs and so on, so forth. To the best of our knowledge, this principle is still applicable. Yes. would the government decide to amend it, then we will apply it as well, but it's out of our control. Yes. What is the expected increase in 2023? There also, we don't have a crystal ball, but at this stage, we do not see An increase in 2023 as high as what we have enjoyed in 2022. Perhaps to add to that, the forecast we would use internally for this is always the one coming from the Federal Planning Bureau, which is accessible whenever you want to take a look at it, which for the moment foresees one additional index jump to come this year towards the end of the year. What it means for our year-over-year comparisons in terms of inflation, where last year we had, I think, five indexations over the course of the year. We will see that as we progress through the quarters, the year-over-year impact should decrease, the plus 11% is likely the highest we expect it to be, at least based on the current forecast from the Federal Planning Bureau. You can find all of that information, also there, which is exactly what we base ourselves on. Relating to the press concession, let me first restate the fact that we are delivering a qualitative service on the current press concession. There's never been debate around that one. There is a new tender which has been extended. It's already we are the level of request for proposal with a lot of details. We are participating to this tender, and we have the conviction that we are very well placed to win that tender. This is the basic assumption under which we are working right now. Thank you, sir. Please. When I go to Chiel De Clercq of KBC Securities, please go ahead. It's fine. My first question would again be a bit on the parcel volumes, 'cause you mentioned excluding the hunting print that you see like low single digit growth. I think the Amazon growth was 2.5%, but there was still about a month of insourcing in there, which is quite a strong performance. Are you gaining back some of the volumes from Amazon there, or what is the rationale behind this? Following up on this, I would have assumed that the first quarter would be a bit more of a tough quarter, Given that, the January and February, we still not had the Ukraine impact. Looking at that, I was just wondering how you see volumes evolve in the next quarter, and if the mid-single digit outlook is not, yeah, too low, let's say. A second question would be, I fully understand that you, like you mentioned in the press release, that you cannot give a timeline on potential cash outflows regarding the current investigation. I understand, of course, that there is a government part and of course the internal review that you are doing. What should we, yeah, expect from the internal compliance review? Is this still something that we can expect in 2023 to be concluded? The reason that I'm asking this is in terms of potential provisions that might be booked, when could we expect this? Maybe following up on this, how this will translate in potential dividend cuts, or if this will already be taken into account for the AGM later this month. Those were my two questions. Okay. Let me take... I'll start by the second one, and Koen will take the first one. Yes. When it comes to the investigation, thanks for understanding that, these matters are extremely complex. We are, all decks, all in on decks to try to, go to the bottom of it. It's not only one contract, it's 3 different contracts. You have a lot of, laws applicable, so it's from a, from a juridical-legal standpoint, it's extremely complex. It's really not easy. We really would like to go as fast as possible to assess, the impact of those. Also, we don't want to rush because we also want, to... Despite the fact that some misconduct happened by some people in the past, we also want to defend the interest of bpost and fight for the right thing we could fight for. We want to build a strong case when it come to discussing slash, if you allow me, negotiating with the government to come to an agreeable solution to it. It will take time. It's not, we have to apply one number which is expected profitability so much%, then it would not require so much time. you know, it's not the case because contracts are different, legal situations are different, and there is no one set number on what is an acceptable profit for these kind of services. When you are in a tender, then it's the market reference at place. When we are not in the kind of tender in a stated rule, it's another rule that takes into account. Even within that one, the level of risk which is embarked into the contract could also lead to additional margin. sorry, my answer was a bit long, but we really want to fight to defend bpost to still be able to get the best possible outcome when it comes to negotiating this margin with the Belgian state. Okay. I'll take the second question here, or actually your first one, on sort of the parcel volume evolution. You are right indeed that, in terms of comparable, the start of the first quarter is a bit tougher, than we would expect the rest of the year to be. We also see that when we look at sort of the evolution month per month, that March is a, is a month with a more favorable evolution. At this stage, given that it's one month, it's a bit too early to draw conclusions yet on the remainder of the year. There is another aspect to be taken into account though, which is that last year, the Commercial Hunting Plan, we have onboarded customers throughout the year, which means that the comparable from that sense will become more difficult as we go through the year. Those elements combined, and given that we only have one month to compare like for like, for the moment, we retain that mid-single digit outlook with the potential upside that could come, but which will be confirmed in, I think in Q2, when we will be able to communicate more around that. Okay, clear. Thank you very much for that. Thank you very much, sir. We'll now move to David Kerstens calling from Jefferies. Please go ahead, your line is open. Hi, good morning, everybody. Two questions. Can you please run us through the calculation, how you get to the EUR 25 million-EUR 50 million impact in relation to the revenues of EUR 104 million? What are the assumptions on the line, the EUR 25 million hit? What do you assume when it will be EUR 50 million? Why can you not calculate a similar impact for the for the earlier years? This is all currently only just for 2023. What should we assume going forward? We lost you, David. Sorry, what's that? We lost you for 10 seconds, I think. Yeah. Okay. I'll ask my question again. The last thing we heard was why can we not do this for the earlier year, and then everything after that we missed. My question was, can you run us through the calculation, how you get to the EUR 25 million-EUR 50 million EBIT impact in 2023, in relation to the revenues of EUR 104 million? What do you assume to get to EUR 25 million? Because I understand you take now one-fourth of the EUR 25 million in your Q1 earnings. How do you get to EUR 25 million? When will it be EUR 50 million? What is the difference there in what you have assumed? Why can you not make a similar calculation for the earlier years that you had these contracts in place? Secondly, on the press concessions, what is the reason for the reduced scope of EUR 125 million? Is that because the earlier compensation of EUR 167 million was seen as too high? Is there a risk that you could have to pay back the difference historically as well? How will you mitigate for the lower compensation for the press concession? Will you then put the newspapers in the mail delivery rounds? What are the measures you can take there to offset that effect? Thank you very much. David, thank you for your question. Let me start by the second one. When it comes to the press concession, it's the state who has decided to allocate a lower budget to that topic, to that service. Mm-hmm. They did it in a very, I would say, logic and consistent way because they have not copy-paste the previous tender and just say the maximum allowable budget is reduced. They indeed reduced the budget, but they also adjust the operating way, the modus operandi. Mm-hmm. The condition, the technical condition. Mm-hmm. Of the RFC. Mm-hmm. There's been, I would say, balanced and logical in the sense that they say, "We are ready to dedicate, or we want to dedicate less money to the service, but we expect also, different type of services from the people who would answer the tender." Of course, we are willing to answer the tender as already said. I reiterate that I believe and we believe that we would be in a very good position to carry out the tender and to win the tender. Is it now true that the historical compensation of the press concession is also under review? I think historically you received EUR 167 million for- No, no, no, no, no, it's not. On this one, as you can also see in our disclosure notes, the compensation for the press concession is something which was audited ex ante by the European Commission and is audited ex post every year by the College of Auditors, including the Court of Audit and our internal auditors. At this stage, we have no indication that something would be materially wrong with that calculation, leading to an overcompensation issue. That is not on the table at this stage. That said, the Belgian government has announced that they would launch an audit to ensure that there is no overcompensation. Up until today, we have no further details on that audit, so it's very difficult to make any risk assessment on that at this stage. As said, it is already audited, both ex ante and ex post. Since many years, huh? Indeed. Since many years. Correct. Perhaps just also to complement on sort of the how to mitigate question, as Philippe spoke about the changed tender, I want to point out that the tender itself, the request for proposal, is out there in the public domain. Absolutely. If you want to, you can have a look at that to also get a sense of the changes which were put into place by the government. Some of them being very technical, let's face it. That's true. Fair. Yes. Coming back then to your first question, how did we get to the EUR 25 million-EUR 50 million? First, it's important to state that the compliance reviews, they are not finalized yet. We are at the stage of preliminary results, which means that there is still a lot of uncertainty. As you will understand, as soon as we are aware of something which could materially impact our guidance, we are forced to disclose it, which is exactly what we've done to communicate transparently to the market. It also means at this stage, we don't have all of the details just yet. How do we get then to the EUR 25 million-EUR 50 million? First there's three contracts, and based on the audit findings so far, those three contracts are very different in terms of what exactly is the issue there in terms of legal framework, in terms of potential margin issues and so on. We need to distinguish clearly between three contracts. Then there is a lot of doubt or things still to be determined on what is the reasonable margin. As Philippe said, that is also something which we are looking into to make sure that we get to something which is in the best interest of people. If we take sort of these two parameters, we look at the three contracts, we look at potential outcomes in terms of reasonable margins, you can get a lot of permutations in between those things. When we do that exercise, based on what we know today, we end up with that range of EUR 25 million-EUR 50 million, where the EUR 50 million is, and just to be transparent on that one, it's saying all of those contracts go down to the margin of 7.5%, which you see circulating also in the newspapers. That's sort of the way we get to it. Why can we not do this for earlier years? I already explained that there's a lot of uncertainty still, even on the impact for 2023, sorry. Once you look back, it starts getting even more complex, where honestly, at this stage, we are not able to make any reliable estimate that we can share. Then you also asked, why is it only one-fourth of EUR 25 million in the Q1 results? This is rather a technical point. Whenever you have uncertainty on these things, IFRS foresees that you book the lower end of the range and you disclose the full range, which is what we've done. That's why there is EUR 6.25. It doesn't mean necessarily that that will be the outcome, you still need to consider the full range. Okay. Understood. Thank you very much, gentlemen. Thank you very much, sir. We'll now go to Sumit Mehrotra of Société Générale. Please go ahead. Thank you. A few questions. First, which specific entity will ultimately assess the overcompensation amount? The Belgian government, or are we talking about the European Commission here? What is the current state of engagement with this right now? Secondly, an update on the CEO selection progress. Thirdly, how much scope do you really see for FTE reductions at Belgium or the bulk of this is behind us, after strong progress? Is there enough goodwill to continue doing this? Lastly, have I understood this correctly, that from your very recent comment right now in the call that you do not see the risk of overcompensation on the press concession that is not on the table. Am I right in my understanding? Thank you. Sumit, thank you for your question. We'll take it maybe, starting from the last one to the first. On risk of overcompensation, exactly as Koen said it's a different, totally different situation. There's been an ex ante review by the European Commission. Yearly review by the Collège des Commissaires relating to this contract. Nothing major has ever come out from this review. Of course, when there is a review, there's sometime here and there small stuff, but nothing major has ever happened. When it comes to the audit that the government has announced, as I said, the audit has not started. We are not even aware of what is the scope of that. At this stage, it's very difficult to give you anything more. Mm. -than what Koen has mentioned. Mm. When it comes to FT reduction in Belgium, we want to continue being efficient and apply efficiency measures everywhere possible. It's an ongoing process. There are. Mm. We believe that there are still pockets where we could improve. Will it be at the same pace? To be seen. You know, also, when we are seeing that the parcel volume are going up, it's also something that gives us, puts us in difficult situation to guarantee that we will reduce accounts. Maybe we will end up a situation where we don't have to reduce any further because we have the right sizing to absorb the volume. By the way, it's exactly the same story that we are saying for the U.S. Mm. We made that point in Q4 last year and if you recall, the volume that we have processed in the U.S. was, during the peak time, was lower than the year before, but we have adjusted our cost base on the variable on a fixed cost base of the level of the warehouses. Now we went to an additional layer on SG&A for all the function in the U.S. That's exactly the way we want to go on. Yes. We are not obsessed by head count reduction for the sake of head count reduction. We are obsessed by having the most efficient organization in any given time to be able to deliver and to serve our customers. When it comes to CEO selection process, I think you know as much as I know, it's, a headh unter has been selected. Even yesterday, Audrey during the press release from Belgium press, says it's an ongoing process. The willingness of the board was to make sure to have the right profile before starting the hunt. The choice will be made when the right profile for the company will be identified. Pam. Sorry. The last one was which specific entity, to. The which specific entity. There, I would recommend you to go to the presentation where you see it's under the Page 3, where you see that for every single contract, which are the contracting parties. Procès-verbal, it's Department of Justice. 609, it's Finance Department and European license plate is Mobility and Transport. All of these three are Federal entities. Mm-hmm. As opposed to regional entities as you know we have in Belgium. Yes. I think Sumit, you also specifically on the European Commission. I think here it's clearly it's a two-step process with first the entities which Philippe mentioned, and then depending on the applicable legal framework- Yes. Potentially at some point, the European Commission will be involved. It's really it's a two-step process, this one. Thank you. Thank you very much, sir. We'll now go to Nicolas Mueler from Kepler Cheuvreux. Please go ahead, sir. Good morning. First question is, I understand that you have an overall head, an overall business volume of some EUR 422 million with the Belgian State in 2022. That has three buckets. First one is the press concession, EUR 170X million there. EUR 104 million now for these three concerned services, leaving a third bucket of also EUR 100X million in business. Question here is whether you see any risk of, you know, other findings in that third bucket and whether that one is actually being investigated at all right now. Secondly, I totally understand the complexity of the situation you're in. And I appreciate that for good reasons you probably didn't, don't take provisions. Yeah, but. Mm-hmm. You could also take the point of view that a provision can be taken out of conservative, conservatism. Are you worried about self-incrimination in case you book a provision early? Now, did I understand correctly that you did not provision for the services impact? Yeah, you know, the EUR 25 million-EUR 50 million yet. Finally, maybe also one of understanding. The press concession is apparently being audited every year, nobody ever looked into the profitability of the other services. How is that possible? Thank you very much. Okay. Thank you, Nicolas. Let me maybe start with the first one. The breakdown of all the revenues with the Belgian State. Indeed, as you mentioned, there's 2 buckets which are already clearly identified. There is the press concession for approximately EUR 170 million. There are these 3 contracts for EUR 104 million. In the remaining part, we actually still have 2 things. One is the 7 management contract, which represents around EUR 135 million. The remainder, these are standard postal service contracts we have with the Federal State, just as we do with any other customer that sends large amounts of letters. Those are the different blocks. In terms of where do we see other risks, I think in the management contract for the moment, there is no indication that there would be anything that there would be any issue. For the regular contracts for postal services, these are indeed regular contracts like with any other customer. Again, no indication of any issue there. You also asked around the provisions. Here, in fact, we just apply the IFRS rules. There's no choice on being conservative or not. It's really we apply the rules, where in order to take a provision, you need to have more than 50% probability of a cash outflow. That is the case in this instance. You also need to be able to have a reliable estimate, and that is the one where at the moment we don't have a reliable estimate. As soon as we do, it will indeed translate into a provision as we will abide by any accounting rules that apply. Just to be clear, for 2023, the EUR 25 million-EUR 50 million impact, for this one, given that we are able to estimate range, we have included already a part of that in the first quarter results, being that one-fourth of the lower end of the range, with the remainder of the range being disclosed as part of our press release to the market. From a methodic, methodical standpoint, sorry, difficult to say. It's we have to reimburse the alleged extra profits. First we need to determine it, and then you could apply the notification. The reason why we will be first assessing what is a reasonable profit under the applicable laws. Once again, they are different in the three different contracts. Once this being done, we look how many years do we need to go back. Also noticing that all the contracts are not in applications with the same number of years. It's a second consultation. Anyway, we need to answer to the first question before contemplating the second one. Yeah. Philippe, I think maybe you want to take the last one. Sorry, which one? I forgot. It was on the press concession being audited. Yeah. Okay. Yeah. The press concession is audited. Why are the other services not specifically audited? It's not up to me to answer that question. We are submitting our financial statement to a regular audit from a commissaire, Collège des Commissaires. The Belgian government has never expressed the willingness to review the other one. You could ask them why they have not done it, but it's not up to us to answer to that question. We've always been, transparent and cooperative with, Belgian authorities when it comes to question, that one. Sorry to say. Yeah. Uh- Just to be very clear, so the margins, they are, they show up correctly in any analytical. Yeah. -accounting model we have. As Philippe said, in the end, the question of why it is not audited is not up to us to answer, but I could perhaps give an indication in the sense that the two other contracts we have, notably the press concessions and the management contract, they are flagged as State Aid cases. Yes. Under more scrutiny than the others, which were up until now, not flagged as such cases, which could be the part of the answer, that you're looking for. Thanks a lot. Thank you very much, sir. We'll now go to Mark Zwartsenburg of ING. Please go ahead. Thanks for taking my questions. First, coming back to parcel volumes, I want to clarify still a bit the numbers that you mentioned in the presentation. The +9.1 is the reported volume growth. If you exclude the Hunting Plan, you mentioned that it is low single digit growth. However, there's also still that Amazon impact. You mentioned a positive impact, according to me, last year, there was still some Amazon volumes in there, I guess it was still a negative. If you strip out the Hunting Plans and the low single digit growth number, does that still include? Should I adjust that for the 2.6% impact from Amazon? Do I have to add that on top to get the real underlying growth, so it's more a mid-single digit number? Is that correct? I'm not sure I fully heard it, Mark, because the line was not great. In terms of Amazon impact in the quarter, there was progressive insourcing by Amazon throughout the quarter last year. If you look at the Amazon volume evolution in the quarter itself, in its totality, it is a positive evolution, which is in fact pretty much in line with the rest of the market. Stripping it out or not makes very little difference. We end up at that same market evolution of low single digits, with then obviously the rest bridging the gap to the total of the +9.1% being derived from the Commercial Hunting Plan. I hope it answers the question because I didn't capture it fully, to be honest. Yeah. Maybe to make it very clear, if you strip out, say, the Commercial Hunting Plan, but also the Amazon, that is basically your real underlying growth. I guess then if you had low single digits excluding the Commercial Hunting Plan, if I then make an adjustment for the Amazon insourcing impact that was still in there last year, you probably have a higher growth rate underlying in the coming quarters where you don't have the Amazon impact anymore. Is that correct? Yes. Indeed, at some point, Amazon will become part of sort of the like-for-like comparison, and thus. Yeah. be part of the market growth, where indeed, if March is confirmed, but again, we're talking about one month, which allows for the moment a like-for-like growth, indeed, we may end up with a slightly better parcel growth than we had originally foreseen. yes, that's true. Yeah. 'Cause that part is then explained why March is seeing a more favorable trend maybe than January. Exactly. Exactly. Yeah. I don't want to put too much stock in one month. It is what it is. It is one month. As I said, we'll come back to that in the second quarter once we have a better visibility on the like-for-like comparison. Yeah. Yeah, sure. This already clarifies a bit what the real trend is. To come back on that one, on the press concession. The budget is lowered from, let's say, I heard the number of EUR 170, or sometimes it is EUR 175. David, I think that is a different number. It's going down to EUR 125. What will be the impact on your EBIT for if it would be for the full year in there? What would be the lost EBIT from lowering it from EUR 175 to EUR 125, given that it requires some different service, therefore potentially also different cost base? On this one, first, I won't be able to fully answer the question. Why? Because we are in an ongoing tender process. What I say may inform potential competitors on the offer people would be considering to make, which would not be in the interest of the company. You'll understand why I cannot disclose any specific impacts on this. What I do want to point out, though, is that, as Philippe said, the RFP itself has been significantly adapted in terms of scope, but also in terms of setup of the entire remuneration mechanism, which means that there are ways to compensate this decrease in subsidy from the State by other means. I'm not able to give you any more detail at this stage, again, as we are in an ongoing public tender process. I fully understand that. If I take 7.5% of that gap that you lose as a margin, is that the minimum impact? I'm sorry, Marc, we'll not answer that one. We are in the middle of a tender. Yeah. We will not disclose anything more on that. I do invite you to look up the RFP, which may already answer some of your questions. Yes. Okay, okay. Maybe lastly, you said we can't give you the impact on the former contracts only for this year or for the, for the other buckets. What if you would apply that 7.5% margin, which you use now for the EUR 50 million impact? What if you would apply that 7.5% maximum margin on all the years, 10 year back as a maximum clawback? Could you then give me a number on what will be the full number? I think you could do the math yourself, but, we are telling you that we are not in a state to assess it. Exactly. Your guess would be as good as anyone else guess. Well, I certainly do that, but I just wanted to get a bit of a number out there that makes sense for everybody. Otherwise we have 10 numbers out there. But I'll do the math. I really think, Marc, on this one, there is a reason why we say we cannot estimate it. It's because it is highly complex. There are many parameters at stake. We are just not able to make a reliable assessment. No. I think at this stage, in fact, no one is able to make a reliable assessment, to be fully frank with you. I cannot share any numbers because really I don't have any decent guess. You could, of course, take any type of calculation which would give you a extremely broad range. We have to be honest, today, we just don't know yet. Thank you. If you want to make a comparison with the pay of that outside the presentation. Mm-hmm. we say the fine could go up to 10%. Yeah. Top line of bpost, EUR 4 billion. Yeah. Potential impact EUR 400 million. Yeah. At the end of the day, we concluded that we have not taken any provision. Yeah. Far, for the reason, possible but not probable. Yeah. It's the same here. If you want to say, okay, maximum 50x 10, do it. It's not the avenue that we have taken. Just in the interest of time, I see we are already over time. I think we still have two people that may want to ask questions. Let's limit it to two questions each maximum, please. Let's move to, I don't know who the next one is in the queue. Yes, sir. Thank you very much. We'll now take questions from Mr. Henk Slotboom of The Idea. Please go ahead. Good morning, Philippe, Koen, and Antoine. Well, two questions if I may. First one is on the press contract, and I'm not asking any numbers or whatever. I'm curious about the mechanics of the distribution contract. Am I right to assume that on top of the payment you get, the compensation you get from the federal government, there's also a charge that's paid by DPG Media and the other publishers? Mm-hmm. If so, is there a way that you will lose around EUR 50 million in terms of revenues on the new contract, assuming that you get it. That you can claim back part of that damage from the publishers, say that you can pass on part of the cost. This is purely hypothetical. I'm not asking you for any numbers or whatever. It's simply about the mechanics of it. That's my first question. The second question relates to, well, there's been a lot of negative publicity on bpost, and a year ago, some of your peers had some problems with subcontractors. Well, I don't need to mention any names or whatever. Immediately you saw a response of clients at bol, publicly said, "Listen, we don't want to be associated with malpractices," and that sort of things. Mm-hmm. Has the negative news flow that happened over the past few weeks, months, has that in any way affected your relationship with clients? Are you afraid that it could lead to any commercial damage? I'm not referring to the government, I'm referring to all the other contracts you have outstanding. Thanks for the question, Henk. I'll quickly respond to the first one because the answer is very short. Then I'll pass it on to Philippe to answer the second one. So, negative publicity, yes, and we cannot only we can only be sorry that sometime it's only pointed out or pointing to the bad thing and forgetting about the good one. I mean, the fact that we have a strong result for Q1, it's not a coincidence. We had strong result in fourth quarter as well. Our customers are still very happy of the services. So, to respond directly to your question, Henk, on the impact, potential impact on commercial, we have not seen it. I have to admit, I must add so far, but I'm also not hearing that the call centers are full of customers asking to stop the contract and this kind of stuff. It's not the case. Mm-hmm. It's not the case. Yeah. Which is more difficult is the economical situation. Mm-hmm. As Koen mentioned it is too, especially in U.S. where we are in over capacity. Yeah. We have not been able, and it's a question I'm asking myself nearly every day, do we see an impact, a link between the two? The answer is no. Yes. This being said, for me, the question, allow me to broaden a little bit the question. On the commercial side is one thing, but there is also a very negative impact on our employees. It's not "fun" to work for a company which is in the press every day, only pointing out on bad things, and mostly driven or generated by a handful of people, which is far from the totality of the bpost employee, which are 34,000 around the globe. For me, if you ask me, I'm more worried of our colleagues than for our customers. Don't get me wrong, of course, I value very much our customers, and we continue serving them, but there is also a very negative impact on our colleagues. Okay. Thank you very much. Thank you, sir. Our last question is coming from Monsieur Marco Limite of Barclays. Please go ahead, sir. Hi, morning. Thanks for taking my questions. Very briefly, there were questions about, you know, the underlying growth in parcels. Do you have already a number for volume growth in April, which could clarify what's the, let's say, the underlying like-for-like type of growth? Second question, when should we expect Radial North America revenues to grow again, maybe excluding FX? Is there anything planned there? Should we expect revenue growth next year? Thank you. Happy to take those questions, Marco. First on April, I'm afraid I need to disappoint you. It's a bit too early to be able to say it. In Belgium, there was a public holiday on Monday, so it means we're the start of the first working day of the month. We have not yet run all checks to be able to give you a definitive number. What I can say, though, is that sort of preliminary numbers indicate that we will see a continued strong growth on those volumes. I'm not able to give more detail just yet. As for the US, yes, we have ambitious commercial targets to compensate for the difficult market circumstances. I think when we gave the outlook as well last time, I explained that we were expecting to see for Radial a decrease at the start of the year. On a full year basis, we were still expecting to see growth. So far that remains our assessment. We will see, based on the commercial success we have in the second quarter, whether we can reconfirm that or whether the market situation will make it more difficult to attract, those new customers. The ambition remains to still have growth on a full year basis, for Radial North America. Okay. Would like to thank everybody in the call for having taken time to be with us and for your interesting questions that demonstrate that you really understand the business we are in in our company. As a reminder, bpost will host its annual shareholders meeting next Wednesday, May the tenth. We of course, look forward to staying in touch, and a further announcement will be made if and when appropriate. Our second quarter result will be released on August third. We have the pleasure to host this kind of meeting again. Thank you very much for your time. Thank you for my colleague, Koen and Antoine, and have a nice day. Thank you, everyone. Thank you, gentlemen. Ladies and gentlemen, that was good. It is accomplished. Thank you, attendants. You may now disconnect.