Addnode Group AB (publ)

to the presentation of our Q4 report for 2023. I'm CEO, Johan Andersson, and with me I have our new CFO, so Christina Elstrom-McIntosh, that I would like to introduce. So maybe let's start with Christina, who is new on the company. Maybe a short introduction before we move on with the Q4 report.

Yes, thank you, Johan. I've joined Adnode in December, so I've been there almost two months. Christina Elstrom-McIntosh. I'm not new to this type of roles. I've had over 20 years experience as CFO for listed, non-listed companies, scale up, startup, etc. And I came recently from Charge Amps, which is one of the Swedish leader manufacturer of EV chargers, both software and hardware. And just before that, I was CFO for Lagercans. And I have also a background as a charter accountant. A little bit private. I got three kids that just left the house. I got a husband and a dog that is still with me in the house. So that's short from myself.

Thank you, Kristina. And hopefully you will be able to meet Kristina more going forward. So without an introduction, let's move on to our Q4 report. And as today, we'll talk about Anna Group in brief, talk a little bit short about 2023 before we move into Q4, reminding ourselves what we're doing within sustainability, and then we will open up for questions. So what is Anna Group for you who are new to us? We are an international group. We are providing digital solutions for sustainable design, product data management, digital twins, also for efficient management of real estate and facilities, and effective public administration. We are a highly decentralized structure with 2,700 employees and 20 specialized companies. Our business is supported by global trends such as digitalization, automation, urbanization, and sustainability, driving the demand for our digital solutions. Looking at our geography, big regions for us are Sweden, USA, UK, Germany and then we are also active in some in totality some 20 countries predominantly in Northern Europe and US is where you will find us. So looking at 2023, we continue to invest in new companies, software and employees. We implemented cost-efficient measures and we merged operations. At the same time, we noticed some major changes in the world around us that we had to handle. Looking at net sales, it increased with 19% to 7.4 billion. We continued to increase our recurring revenues, which amounted to 70% of net sales. Adno Group became an even more global company with acquisition on Team D3. And USA is now our biggest geography compared to net sales. We started 2023 strong, but Q2 and Q3 was tougher. So looking at Q4, annual group ended year with growth, stable earnings, and cash flow. Net sales increased by 16%, of which minus 1% was organic. Currency adjusted organic growth was minus 2%. EBITDA amounted to $196 million. Cash flow from operating activities amounted to $228 million. The product lifecycle reported growth of 10%. Restructuring program initiated in Q2 has had an intended effect, and the EBITDA margin has improved. reverse adjusted organic growth of 3% and an improved EBITDA margin. The design management division reported growth of 24%, with currency adjusted organic growth amounting to minus 6%. The acquisition of TMD3 has had a positive impact on earnings. While demand in Europe was stable, demand from the construction and real estate market in the USA remained weak in the quarter. To respond to this week in the monster, productions have been implemented in the USA, which has had a positive effect. And with that, I would like to hand over to our CFO, Kristina Elström-Aktinsson.

Thank you, Johan. And we are going to look at the breakdown of the revenue. We have three graphs. that I would like to take you through. And you start at the bar graph from the left. You can see the breakdown of the net sales for the fourth quarter of the last five years. And the substantial growth, which mainly consists of the last two years. And the current quarter amounts to 2.1 billion compared to 1.8 from here. you know you want also mentioned that it's a 60 percent growth you can also see that the part the major part of the revenue consists of recurring revenue and that increased by about 21 from last year mainly driven by acquisitions and the organic growth of recurring revenue was minus one percent and that is relating mainly to the lower sales of three-year agreements. We can also mention that we are meeting strong competitors from last year, which was the strongest quarter in the history of AdMob. Going to the middle graph, the pie chart in the middle, we can see also that recurring revenue can continue to form a stable foundation of our business model and now amounts to 70% on net sales. Our service revenue grew by 12% in total this quarter and consists of both services relating to software and customer specific solutions. The organic growth was slightly lower than last year by minus 1%. And then the graph all the way to the right, We can see that present a big ton of sales by geography. And also we can see now this is the second quarter in a row. America has become the market of 32%, followed by Sweden, UK, and Germany, about 10% each. We can also continue now, and we're going to look at some of the performance of the three divisions. I'm going to hand over to Johan again.

Thank you. And we did a three-division with .

Increased by 4% in the Q4. Adjustable currency effect, organic growth was minus 6%. The EBITDA was 98 million, and the EBITDA margin declined to 7.9%. Operations in the divisions, looking at it, you can see that Symmetry, providing design, beam, and product data, began to note weaker net sales order resolution in the second quarter of 2023 already, mainly to the construction industry customers, and particularly in the USA. This trend continued throughout the year, and it seemed to be a result of uncertain economic conditions and a lower volume of free year subscriptions. Although net sales improved compared with the second quarter, the sales cycle remained longer, and free year subscriptions are lower than in the same period last year in terms of new days and new volumes. However, the comparative figures for division are high, following record-breaking sales of free year agreements in 2022, mainly driven by USA and the UK. However, the number of customers and the annual value of the underlying contract database, which is the basis for future contract renewals, will continue to increase. We still see great potential for selling Symmetry's proprietary software to a growing customer base. Searches European operations report a stable volume for the quarter and sales in line with the previous year. The cost reduction made in U.S. operations, which were announced in the third quarter of 2023, have had an effect. Team D3 acquired in July 2023 have had a positive impact on earnings. Serviceverse Global, which provides digital solutions for facility management, and Trivia, which provides collaborative solutions for construction and delivering stable growth driven by the acquisition of POS2 in the first quarter of 2023. So, as we have discussed earlier on, there are some changes being made in the business model for our Symmetry business that are a world leading partner for Autodesk, and we've made sense to spend some time and walk you through the changes that are expected to happen going forward. Autodesk, with the partner to Symmetry, has announced the transition from current reseller model to an agent model. The new transaction model will be introduced gradually starting 2024 and is expected to be fully implemented by the end of 2025. We will continue to work with customers to identify the solution that best suits their business and will continue to provide quotes, implement the Autodesk solutions, and provide support. Also going forward, we will continue to voice for its own software and associated services but an agency free from Autodesk for selling the software. We think that the move to an agent model will demonstrate the strength of Symmetry's service offering and its broad portfolio of proprietary complementary products. So looking at how will this change, just to stress, it has something that is going to happen in 2024. What will happen is that now that this is an illustrative example, it's not the P&L for the symmetry, but it's an example of showing you the changes going from the bar model, the early adding reselling model to the agency model. That means that today when Symmetry sells an Autodesk subscription, we sell it to the customer, we collect the money and we get a cost of sales from Autodesk and we provide them with that. we saw gross profit is what ends up, and then we get an EBITDA. What will happen going forward is that instead of invoicing the customer and getting a cost of sale for Autodesk, we will get an agency fee from Autodesk for selling the same volume. We expect that the agency fee will be at the same amount as the gross profit that we are generating from existing volume. Having said that, we also say that we will continue to sell our own technology and services, and there's some other third party, and that will be conducted in transaction in the same way. So what will happen starting 2024, we don't know the exact date. This is something that will happen going forward in 2025, is that a gross profit margin will go up as a result, and as a result, also a market is expected to increase. And that has to do with that we are expecting the same profit, but net sales will go down.

So, looking at product lifecycle managed Q4.

The product lifecycle managed division reported net sales of 499 million, the growth of 10%. Organic growth was 8%, and adjusted for currency was 4%.

If it had just been a million, 59 million, the margin would have been 50%.

It would have been a week compared to the other. Organic growth, a couple of PLM systems in the UK and Germany. Customers are continuing to demand time-finished licensing licenses instead of the previous license purchases with perpetual right of use. As previously communicated, structure measures have been carried out within the product lifecycle management division in order to the organization and cost structure. The previously communicated estimated construction cost for implementation ended up, we said, at 20 million. was recognized in the second quarter, finally in the third quarter, in this fourth quarter. Before an expected . The process management, the process management had a solid performance this quarter. The process management division increased net sales to 346 million. It's a growth of 3%. IFTA increased to 67 million, and EBITDA more than improved to 19.4%. Municipalities and public authorities continue to show some restraint in terms of new investments. The number of tenders decreased compared with the preceding year, but the division's good and well-established relationships with the large public sector customer base frequently present opportunities for recurring sales and the expansion of current assignments. Demand for divisions offering for customer-specific business systems remain favorable in the quarter.

The division is . So it also may change within the structure that . After that, companies

It's more able to take it over Swedish municipality, and I'm going to run the digital urban development process and better conditions for sustainable urban development. As part of this, we also uh they created a new company icebound operation uh was previously part of the key it's not great particularly the digital solutions for the forest sector for the industry based on its existing product portfolio as well as the competence and experience in geographic information systems icebound will offer digital solutions that streamline processes and business flow for the forest industry and base industries. In January 2024, Icebund also made its first acquisitions of Vector. It's a proprietary software for forest and timber management with net sales of 2 million. And on top of that, we made another acquisition to process in Q1, the acquisition of Getas. It's a Swedish supplier of case management system for issues and work orders, public transport and property management. It's an add-on to our company Forsland Stjärna that will strengthen the offer to Sweden's public transportation sector. That's a net sales of roughly six million. So with that and the introduction of the business in Q4, I will hand over to our CFO, Kristina.

Yes, thank you, Johan. And I would like to continue with an overview of the consolidated cash flow. And the way I'm going to do this, I'm going to start with the cash flow operating activities first for the quarter and then the year, and then going down to investment activities for the quarter and then the year. So I hope you will follow that. So looking at the fourth quarter cash flow, it remains strong, 228 million. compared to 261 million in the previous year. And the decrease from last year is mainly related to the lower operating profit together with some increases in pay interest in the fourth quarter. And if we look at the full year cash from operating activity, we generated 485 billion in operating cash flow. and this was a decrease from the year before, and it was mainly due to the decrease in operating profit, 517 million, and also the negative change in the working capital of 125 million. Going down the cash flow, we are looking at the cash from investing activities, and for the fourth quarter, It mainly consists of investment in development of proprietary software. And for the 12 months ending 31st of December, the cash flow from investment activities was 672 million. And out of that, about 460 into the three acquisitions during the year. and also include consideration to sellers for acquisitions made previous years. That is the earn-out payments. And also important to know that we invest a substantial amount in the future products and services, and approximately 152 million SEK is relating to investment in proprietary software during 2023. And then looking how we're financing our investments and operations, looking at the fall quarter, the financing activities, it's mainly relating to leasing. And for the 12 months, we had reflected in the full year and the borrowings for the acquisitions of the revolving credit facility. And it's noticeable that the dividend of last year, $133 billion, was in 2023 in May. And I would like to pay attention that you might have read the report that you proposed dividend of one krona per share even this year, the same as last year. and that will be paid to shareholders in May 2024. And looking at the balance sheet of the group, we're looking at the balance sheet from an operating view to what you find in the report, which is the legal statutory balance sheet. And we can here see that we are continuing to operate by resilient balance sheet, which is very important for our type of business for continued growth, both organically and through acquisitions. You can see also that we have access to additional funds of one billion SEK from June 2023. And the major changes in the balance sheet is relating to the three acquisitions that we have executed during the year. You can also see that the net working capital is negative, and our business model enables us to work at the negative working capital, and that amounts to minus 543 million SEK. Including in the line item provision taxes and other debt, it includes for the sellers of the acquired companies, And as of 31st of December 2023, the amount amounted to 481 million SEK. And we also had other liabilities to sellers of about 56 million SEK. Net debt now at 999 million SEK was increased by 536 million. as we continue to execute acquisitions. The cash position was 667 million SEK, which was an increase of 67 million SEK. And you can also notice that the dividend of 133 million SEK has an impact on the cash position. We have available facilities of 2.6 billion. And we have not utilized 1.1 million of those, which can be used going forward for acquisitions and growth. Lastly, I would also like to mention that we now have repurchased shares. No more repurchase since last summer 2020. We now hold 1,210,000 shares in custody. And by that, we will now continue to have an overview of our sustainability agenda and also looking to three sustainability cases. And Johan will talk about that.

Thank you, Kristina. And with Adam Group, we are long-term and we continue to do what we do. So the sustainability agenda is the same and we are still pushing for it. We believe that the digital solutions that we provide to our customers are enabling them to be more sustainable in how they do wisely choices of the materials to be used in buildings and products and et cetera, and how you create the urban environment that we are all living in. So we think that we can provide the digital solutions to make that happen. Of course, we care for our people and with our people in the environment where we are active, of course, also the way we work with our partners and suppliers. We want to work with the good guys. And we believe that part of the sustainability agenda is to make sure that we have a long term financial solidity so we can make the right choices at our own choosing. And we need to have the government to make that happen. So it's the same agenda and we are pushing for it. So looking at what we are doing for our customers, we have the three examples here that we are highlighting and you can also find them at our website. Looking at the left you can see an example from the design divisions where the company SWG are providing 3D models and digital drawings for the Nordic Museum in Stockholm and enabling them to have digital documents to facilitate repairs and maintenance in order to ensure that the building will stay in their historical profile. They'll also help the Nordic Museum to improve the quality of its building data, and the digital format also enables building information to be easily updated in one place. Looking at the middle of the slide, you'll find an example from the company Teknia in the PLM division. It's a digital twins of vehicles for last mile deliveries. Technia has helped the German start-up Mokke with a virtual twin of its smart petrol vehicle for last-mile deliveries of goods in urban environments. Looking to the right, you will find an example from the process division. It's a company designed to be in Norway, more efficient for the railways. Decides to have supported a Norwegian infrastructure company, Barne Nord, which is responsible for Norway's railways. in implementing a new European rail traffic management system. The party is Norway's largest public utilization initiative today. By investing in a new system, Bona Nova has helped to strengthen the competitiveness of the railway system as a logistic solution. Having more people travel by train and more goods transported by rail helps to reduce CO2 emissions and increase energy efficiencies. So three good examples of what we're doing in other groups. So, finally, looking at the Adno Group. We have a strategy with both organic and acquisition led. We believe that the structural underlying demand for the digital solutions offered by our companies extends beyond and across economic cycles, driven by customer needs for digitalization, automation, urbanization, and sustainability. However, short term, the current economic situation is dominated by uncertainty and restraint among our customers. And our group's strategy is to, with a sound risk taking, cap life on these trends by continuously acquiring new businesses and actively supporting our subsidiaries to generate sustainable value growth and drive organic earner growth. 2023, we will continue to invest in new companies, software and employees. In addition, we have implemented efficient measures and merger operations to strengthen our positions. And the group has become a more global company the acquisition of team d3 meant that the usa became the growth's largest market in terms of net sales the strength of our companies their abilities are quickly in a changing world and anders group's strong financial position and strategic advice provide a good foundation for continuous sustainable value creation and with that we would like to open up for questions and uh Thank you for taking the time to go a little bit longer with some technical issues, but I think we are past that. So let's open up for questions.

If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Daniel Gerberg from Handelsbanken. Please go ahead.

Thank you, operator, and good morning, Johan and Kristina, and congrats to a stable report. A few questions from my side, starting off with design management. Obviously, we will focus more on the gross profit growth going forward. But the question is, if you have decided how you report the top line for design management in 24 and 25 timeframe, will you divide it into, you know, the VAR and the agency model so we can keep them separate and see the development more or less and calculate backwards to see or any thoughts on how to get away from the uncertainty that a mix would create.

We are looking into that. We haven't made any decisions on that, but there would probably be some changes in how we do report, but we would like to come back to directly how we do it. However, there are some guidance that I would like to highlight in the report. For example, we are writing there, for example, if you look at the symmetry business, you will find that today, half of the gross profit generated by the symmetry business is from own services and own preparative products. And the other half is from the, what you would call the bar business, selling the Autodesk business, the gross profit. And then you need to figure out how much of the design division that is not the symmetry business. And I know you are really good, so you probably will find that from public figures looking at how much is the net sales of the TRIBIA and SWG.

Fair enough. Thanks. And may I ask you on the, I should know this, I guess, but the new transaction model, will it also change Symmetra's relationship with existing clients, or is it merely new signings, i.e. will Autodesk invoice all clients also existing?

When we make the transition, what will happen is that there are, for example, it will be a mix from a relationship perspective. As we have, for example, three-year contracts that are ongoing, there are installments that are going to be made. That existing contract will go on going forward. But that should not be confused with our reporting on net sales, because as we we will still have the same revenue recognition principles. That means that when we do the switch, we will report any new sales according to the new transaction model. If you understand my answer on that.

Yeah, I think so. Yeah, and we'll come back to it obviously later on. And may I ask you also, you have seen in the US a certain weakness in construction segments throughout 23 And I was thinking, you also mentioned in the report that it was seen in Q4, obviously. But entering 24, and I know you don't give guidance, but should we expect it to stabilize in first half or accelerate? And also, if possible, how large part of the US design management business is dependent on the US construction segment?

starting with the last question, looking at how much of the business is dependent on the construction market. In the US, it's probably, I would argue, almost half the business in the US are addressing what we would call the AEC market. It's not just pure construction. The architects are sort of depending on that. And then looking at the growth in the market, Then we also need to look at it from two perspectives. The underlying market growth, it seems like it's not getting worse. It's more stabilizing. And then let's see how much it will continue to grow. That's one thing. Then the other thing it has to do with our revenue recognition principles is that we also this year, as we were selling, had a mix with less three-year deals moving to one-year deals. That affected this year. So when we are coming to Q2 and Q3 next year, then that means that the pre-year deals that hopefully were not sold that year, we will be able to sell them next year. And that will sort of help with the net sales compared to Q2 there. But it still means looking at the growth, we are not expecting high growth in the market going forward. Hopefully it will stabilize.

Yeah, that's fair. And I have a last question on that. PLM Technia and then the SOAR reported yesterday and they saw growth level of some eight to ten percent in 24 and well double digit again in 25 and onwards. Can you comment a little bit on how you see in your crystal ball is it fair to assume similar levels or is it something impacting also comes horses.

We are a little bit worried we don't make any prognosis for the future but we tried to give some flavor to it anyhow and what you can see that in what we would call a tough year for the PLM division we still had organic growth of around I think if you adjusted here in Q4 for currency effects and all things but it was 4% organic growth and at the same time we managed to uh do a major cost reduction program increasing margins and hopefully we don't have to spend 2024 on cost reduction and be more focused on growth so but if we are able i always kind of say we can do five percent that's that's as expected for us i think we do more i'm happy with that but we we never plan for more than five percent thank you very much and good luck here thank you

The next question comes from Fredrik Nilsson from Redeye. Please go ahead.

Thank you and good morning. I want to start with the PLM. I mean you had a quite strong third quarter as well, but then you had quite a lot of licenses compared to the same quarter last year. However, this quarter, we see that the licenses are about the same. Still, you make a really strong margin compared to what you have done historically. Have the PLM found its place, or are you happy with the performance?

Thank you for that. Looking at the PLM, there is a seasonality in PLM. So Q4 should be the strongest quarter for the PLM businesses. And that has to do with it's still the division where we actually have the business model with more of the classic licenses. That means that you spend the year sort of talking with the customers, discussing with them, and they're probably a big OM. And by the end of the year, they are ready to sort of push the button for a bigger investment in licenses. So that sort of follows it. PLM in a normal year, it should be the strongest quarter. And I guess we can see the effect now of looking at the cost. So this is a Q4 that they should be able to deliver going forward.

Okay, thanks. So then design management. I mean, you had a negative organic growth in this quarter, but it was a lot better than seen in the last quarter. So could you elaborate a bit? What was the main driving factors behind the improvement compared to last quarter?

Compared to last quarter, you will find it in the U.S. market. As we described in the earlier in Q2 and Q3, we were hit by low market demand in the US and also we had the big effect of the pre-year deals transition from a mix of a pre-year deals to more one-year deals that was also hit so those two were hitting us in the US market and now as the US market is probably I would say that it's stabilizing but still not a sort of a growing market that's a good effect and then we were We're also able to do some cost reduction in the U.S. market as we were reducing the number of people reduced. That also helped on the profits side. I think you will find the biggest change compared to Q3 to Q4 is that the U.S. is doing a little bit better. And also on the profit side, as we said in Q3, that was the first quarter where Team D3 was part of us. And we probably had more focus on making the transaction happen there. And now in Q4, they are contributing as they should with regard to profit. And all that together makes Q4 a better quarter than Q3 for our Symmetry business.

Okay, so that's the U.S. market outside of construction then getting better, I suppose, or how should I interpret?

Looking at the organic gap, no, no, I think it's not from the market side. It's more that T&D-free. they, looking at the profit side, they were more, I guess it was sort of what can happen sometimes when you are part of a transaction, you get more focused on a management team to make the transaction happen rather than focus on business. It's quite normal in entrepreneur-led businesses. And now they are able to focus on the business and then you get the profit-wise. So market-wise, nothing big changes. It's more that you're able to sort of do the final part of business, making sure that you are generating the profit that you should. And that has more of a profit side for T&D. Market-wise, it's sort of still the same stable market with regards to manufacturing. What has changed is that the construction business has stabilized, and we also see the effect of... I think it's more that, if you look at it from a market perspective.

Okay, great. About process, you mentioned fewer procurements, all those things that you have done quite well, relatively speaking, but what about the solid demand for customer-specific systems? What are the reasons for the divergence in your view between those two?

I think the reason is that we have a very strong market position at local municipalities providing software for helping them with building permits, environmental permits, creating and everything that has to do with that. So that means that it's a very sticky business. So when we say that there are fewer tenders, it still means that we can do business with them and growing from the business that we have. That's the first thing. And the second thing when we say the tailor-made solution is that we have an offering to our customers who there are customers in the public sector they want to build their own systems and we can help them build them from scratch and then take responsibility for those going forward and helping them out to support that. In that sector with the tailor-made solutions we have had a very strong order book this year so we are looking with sales. And if you combine that with a slower labor market, meaning that we will be able to keep the same people in the projects during the year, that creates a better sort of sustainability in those projects. And that helps from a margin perspective as well, because you don't have to teach new people going into the projects. You don't have to replace them at the same rate. So that supports that business.

Okay, I see. Thanks a lot. That's all from me.

Thank you.

The next question comes from Eric Larson from SEB. Please go ahead.

Thank you and good morning. I have a few quick questions on design. So first off, my understanding is obviously that three-year deals are down significantly versus last year, but you're still selling some of it. So Would it be possible for you to give a ballpark figure here on how much three-year deals are down these last few quarters versus 2022? Are we talking 25%, 50%, 75%? Any color?

So far, we haven't given you any exact guidance on that. And we will not be able to do that this quarter as well. And it's more that we're looking at that from a competitive perspective. to our other partners that we're fighting with. But it's down significantly in the mix. It's both that, like you said, the new sales of it and the mix of it. The good thing is that we will be able to sell, if we sell a one-year contract, instead of a three-year contract, we'll be able to sell that next year as well. So we don't have to wait three years for that. But it's down significantly. And that's what we are trying to help with addressing and say that the underlying contract base and the number of customers are still growing. We hope to get, I had a question earlier on, do you want to, are you going to change your reporting in any way? We'll see how we can help to address that. I don't have any good answers today, but the only thing I can say is we're looking into how we can do things a little bit different going forward with regards to reporting.

Okay, fair enough. And then, as you mentioned, the underlying contract base, some encouraging numbers there. Would you say that That growth, is that attributable to market share gains? Is it driven by upselling to existing customers? Do you have any drivers you see there? Any specific ones?

It's a mix. So we're not saying that we are having a high growth, but there's a growth. And like you said, it's a mix. Both that we are able to underline some growth in the market, but also that we are able to gain new contracts because we are also competing against other partners in the market. So the customers are wanting to work with us because they see that we have a broader offering. We can help them with services. We have complementary products that will enhance their investments in the Autodesk platform. So yes, we are gaining some market shares as well.

Perfect. And then last question on the Again, design management and the pretty resilient numbers here. Obviously, it's very difficult to predict where three-year licenses end up, but it was quite a beat to consensus figures. So I'm just curious, were you surprised yourself on the numbers and heading into the quarter? Would you have guessed this outcome?

Not as good as we ended up, but there are always... we can see that you're always a little bit worried when you have a queue free, like we reported, how will the queue flow? There are some possibilities. If we are able, this is a business model where if we are able to sell a little bit more than expected, then you will have a good outcome on the final report because we don't need to hire more people to make that happen. So you have a good sort of leverage on that.

Yeah, indeed. Um, Okay, that was all of my questions, so thank you.

Thank you.

There are no more questions at this time, so I hand the conference back to the speakers for any written questions.

Yes, we have a few written questions, and I'm going to take the first one from Joni Grönqvist. And the question is, you have been active in the M&A space lately. When in the big picture, how you see the M&A market? And also comment on why you have been successful in completing acquisitions.

Good question. We are continuing to be active in the M&A market. Normally, you don't see everything that we do. Constantly peddling under the water line and then sometimes we pop up and make an acquisitions and that it could be silent for two quarters and but then we do three deals in a quarter and so and for us is more we Acquire companies from entrepreneurs who want to be part of a group and continue to grow that sort of a basis makes it very much Relationship driven and I think that's a success for us Probably take some time, but we are able to when we sort of meet and are able to finalize the deal. We know that people are sort of the right from a cultural perspective as well. And hopefully what we're seeing now from a bigger perspective is that the price in the market, they're reaching more of a level now where buyers and sellers both think that we're sort of approaching the right numbers going back a year. The seller still thought that the price level was as it used to be a couple of years ago, and we were saying that we were not willing to pay that. But I think we're reaching more of a level there. So hopefully we'll see some more acquisition this year.

Right, thank you. We have a few more questions, too. And this one is from, I hope I pronounced your name correctly, Emilie. And the question relates to earnouts. Is there a risk with earnouts that managers are solely focused on them instead of the long term?

It's always a risk, but we try to make sure that the earnouts are aligned with what we both would like to do, and that is continue to grow our operating profit going forward. And then we need to be smart about them to make sure That we have a constant discussion. Sometimes they could be decisions that needs to be made that are of a long term perspective. And then we have just just to earn out. So you need to be flexible about them and be, there's always a risk, but we try to handle it. And we have twenty years experience as an organization to handle those type of things.

Right. And here's another one from the same director. It's a constant ongoing.

We do internal leaders because we have to appreciate working in a decentralized environment. And if you haven't worked in one of those centralized environments, it could be sometimes hard to understand it because we give the authority to our leaders to drive the businesses, but we also expect them to drive the businesses. So that means that they are expected to do probably a lot more than you do in other businesses, and you need to embrace that. So that's very much part of it. And how do we do that? It's a normal thing. Make sure that they are able to take on new responsibility. There are some internal training, post-training, be part of boards within internal. So it's a constant thing, but it's definitely something that we address.

All right thank you and one more question from the same writer. How do you make sure that you make good acquisitions from return on invested capital perspective instead of chasing these?

We are quite prudent on what we are expected to pay for our acquisitions. That means that if you go back like three years ago when interest rates were low and it was possible to borrow a lot of money and pay a lot of money for your acquisitions we were losing out on a lot of these because we were not with no time multiple so we are historically a big run six seven times operating profit and these type of companies don't have any assets so there are no amortization no depreciation so it's still breaking profit and sometimes we have i think with the maximum So the multiple we have paid is up to 10 times have been high growing, high margin software businesses. So I think we're quite prudent on how much we would pay because you can never change how much you pay, but you can always change operations.

Right. And then I guess the last question from the audience, and this is how do you manage key personal risk in the company?

The first thing is that you've got to make sure that they find it fun and then be part of Anna Group and work with it. And it's rewarding to create new opportunities and also make sure that you embrace being part of a growing company. Looking back historically over the last 20 years, you will find that Anna Group on average has roughly 15% growth. And you need to make sure that you have the people who like that, and you also need to provide opportunity for that. and i think that's sort of the major part of it you may need to continue to grow so they can grow right that was all the questions that i had to the call thank you and thank you all for listening to this and