Bravida Holding AB (publ)

Good morning everyone and welcome to Bravida's Q1 presentation for 2023. And as always it is Åsa Neving and myself who will take you through this presentation. So let's start. The agenda for today is the standard agenda, our position in the Nordic market, a deep dive into the numbers for Q1, then also we'll take you through the different countries and then in the end we will have a summary and a possibility for you to ask some questions. So Bravida and our market position in the Nordic market. We are continuing on our growth journey and we are actually close to 28 billion company today. 13,000 employees is what it says on this slide. Actually we are close to 13,500 today. 91% of our customers is recurring and we have 85% of all our orders below 50 million SEK. And as you know, we want to be a partner throughout the whole lifecycle of the property from the design phase, installation, service, maintenance, etc. And want to be a partner for all our customers for all our segments. So 325 branches are serving our customers in a fantastic way every day. This is our history and I think this is a fantastic slide that shows the stability of the business model that we have in Bravida in our industry, but also our skilled people, how they are performing in different markets as well. You can see that we have 9% CAGR on the top line and we have improved the profitability even more, 10% on average since 2015. And in a period with quite difficult market situations, we have had a pandemic, inflation, some issues in logistic chains, etc. And over this time, we also have been able to deliver a cash flow above average. or around 100% on average. It is varying a bit from one year to another, depending on finalizing, how we're finalizing big projects and starting the same. But overall, a fantastic journey that we, of course, think that we in some way want to continue and have a good chance to be able to deliver on that as well. We are the Nordic leader in sustainable technical solutions, as we said. Being a partner to all our customers from early phases of when they are planning a new building, help them build a... a house with the right type of installation, energy efficient systems. If they are not energy efficient enough from the beginning, we can help them to increase the value of a property by maintaining, change some system, do adjustment and also lowering the energy consumption or maybe help them use another type of energy source as well. Every customer has access to our entire offering. We have the lifecycle perspective for every building and we are and want to stay as the industry leader in sustainability. For the moment we are having a lot of employees who are doing a really great job by, in a proactive way, changing the way of working and in a proactive way, help our customers to create value in their own business. It's really amazing to see that we are transforming as a company and are more proactive today than we were before. And we hope that we can continue that journey, of course. So let's go into the numbers for the first quarter then. And we start with the market and the market outlook. We see some increased demand for sustainable and energy efficient solutions. It hasn't really accelerated yet, but I think that the demand will increase going forward. It has started, but it hasn't ramped up yet. We still see an overall good demand for service and installation. And of course, we exclude the new build of residences in that statement. Said that, even if we see a quite strong good demand in the market right now, of course, there is some uncertainties going ahead. Increasing interest rates and inflation may lead to delays in investment decisions, etc. when we're going forward. So let's see what the market will look like in the coming quarters. But for now, the demand is quite okay. It is varying a bit from different geographies, but that is the case all the time. That was the same situation last year as well when the demand were seen as really, really good. So the highlights for the quarter then. 20% organic growth and we are growing in all countries. I think that is the highest organic growth number ever. And maybe you should see it like that as well. We are now entering into... a new quarter. We had a growth, organic growth in Q3, if I remember correctly, 13%. No, Q2. Q3 last year, yeah, with 13%. Q4, 16%. Now we are even higher at 20%. And I think... it will be leveling out, maybe go down a bit, because having this high organic growth is extreme for our type of business and our type of industry as well. And on top of that, as you know, we have had the strike in Norway, which is impacting us with approximately 40 million in sales. 7% comes from acquisitions and we see increased sales in both service and installation. This is the first quarter in quite a long time where we actually have higher growth in service and installation, which is a good thing, of course. Order intake is up 4%. It's improving in Sweden and Finland. EBITDA margin at a stable level, 5%, slightly lower than last year, but having this stable margin in this market situation is fantastic. And at the same time as we are investing a lot in our business and our IT platforms, which we come back to later on in this presentation. Earnings per share up 18%, which is also a fantastic number of course. Cash flow somewhat weaker at 60 million and the injuries is going up a bit with 3%. Sales service 28% growth and the installation is growing with 27%. So high growth on the both segments. If we take the same numbers in another perspective, we can see that we are close to 7.5 billion in sales in the quarter compared to 5.8 last year in Q1. We had said that the service is growing a lot, 28%, organic growth at 20%. And we are also specifying on this slide what kind of investments we are doing, how big they are. 34 million have we spent on new systems and business development in growth segments. And that should be compared to 17 last year. Order intake up 4% and the backlog is down with 6%, but still on a very high level. We see that the order backlog goes down slightly more in Norway and Denmark. If that depends on the market, it's too early to say, but you know that we are growing extremely fast in those countries. So we are slightly more conservative when we try to build on new projects. let's see what the the root cause is of that but we are not stressed we still have a really high order backlog which we have been stated for a number of quarters now and i think that is what you're seeing the in the organic growth today as well and the net sales bridge it goes from 5.8 billion organic is adding one and our 1.1 billion we are growing with more than one billion in a quarter organically and their acquisitions is adding another 400 million and then we have a small effect at one percent on the currency effect as well. If we look at the margin EBITDA 5 compared to 5.1 and now we are specifying slightly more on what we are doing, what kind of investments we are doing. First I should say that the margin is improved in Norway, unchanged in Sweden and Finland and a bit lower in Denmark. EBITDA is also affected by non-recurring costs for implementing new digital systems and digital solutions. That is something we need to realize the business plan that we are working with. That sums up to 24 million compared to 14 million last year. and the forecast for this year 2023 is around somewhere between 100 and 125 million and I think that is another way of showing the strength of Bravida to be able to present high growth stable margins at the same time as we are investing in our future to be able to continue to deliver top quality service helping the customers with their taxonomy issues helping they save energies etc in a more digital way so I think it's really interesting to see the outcome of these investments going ahead. We also have some effects on EBITDA for development in new business, sustainability and modern IT platform according to our plan. And the new world also means that we need to invest in some new roles, competencies, systems, etc. to be able to report what the market and our customers request for us. And driving the business plan forward increases, of course, as I just mentioned, the administrative expenses, but it will enable an improved margin long term, both margin as well as growth. And the increased recurring costs is connected to the IT platform, as I said, but also digital development capabilities and new type of resources, increased sustainability focus and also an improved and strengthened HR support. We have some, to the right, initial cost for investments in the new businesses. In technical facility management, automation, energy management, we are investing in new systems, but also new people, new capabilities to be able to deliver new type of services to our 80,000 plus customers going ahead. And we hope or expect that these will add positively to the margin in the end of this year. The order intake and backlog. We have said that the order intake is up 4%, the backlog is down 6%. Still have an order backlog that is really healthy and on a high level. And you can see how the order intake developed. We have some seasonality as well in the order intake as well in the order backlog normally. But you can see the green line that is continuing upwards, which is quite natural. Let's see, we have quite strong order backlogs in many places. We are now soon entering in our quarterly reviews where we, Åsa and myself, will have a discussion on order backlogs on branch level to discuss what measures we need to do to continue to grow or to make sure that we defend the margin. And having all the acquired companies into the same platforms gives us the possibility to manage the company, to see the order backlog, to see the trend in margins, etc. And that is probably the most important task for us the coming weeks. But still a healthy and strong order backlog, both regarding margin as well as size. Sustainability, the injuries LTIFR is up 3%. It's quite sensitive KPI, so that means that we have had a few more accidents with sick leave this year compared to last year. It is increasing slightly in Sweden and Denmark. Norway is well below the target. And then I'm happy to say that 15% of our vehicle fleet is electric power today. We said last time that we ordered, I think it was 73% of all ordered cars last year were electrical. And now we are using those cars when we need the new ones. So there are some timing issues when the cars will be delivered as well. But the work with our cars and our sustainability focus on our car fleet actually started already in 2019. So it's quite a long cycle to change a KPI like this. And we were really early in starting discussing this actually before it started. it was possible to order electrical service cars, for example. So now we have a system in place which will give us a good development on this KPI going forward. And I think we are well ahead of the competition in this perspective, which is really good. And you can also see that the change in CO2 emissions from vehicles related to sales is down 3.6% in the quarter. Last year, we lowered it with 13.6 or eight, I think. So good to see the great development on this side as well. When it comes to acquisitions, we have done five in Q1, another two in the beginning of Q2. The five I mentioned in quarter is adding 155 million in sales. Strong pipeline, attractive multiples, and we now see a trend shift as well in the M&A market because Even if it's early in the new type of market, we already now see that there are more owners, et cetera, who is interesting to discuss and maybe sell the companies. And having a strong balance sheet to try to use that situation as a market leader in the Nordic market is, of course, really good. So now I hand over to Åsa who will take you through the different countries.

Thank you, Mattias. As always, let's start with Sweden. As in all our countries, Sweden had a high growth in the first quarter. Growing with 21% leads to a top line of 3.6 billion. The growth is coming both from installation and services, but mostly from services, which we are happy to notice. The organic growth is 16% and the growth from acquisition is 5%. Sweden has an unchanged EBITDA margin of 5.5% and a strong order intake of plus 25% and the order intake is also coming from both services and installation. Order backlog is strong 9.1 billion. So almost on the same level as last year minus minus 1%. Moving on to Norway. Norway also has a strong sales, so the growth is 25%, leads to 1.6 billion of sales. And the growth is coming from both installation and services. Here, Norway is growing more on installation. The organic growth is even higher than the total growth, so 27%. And the growth from acquisition is 2%. And then that leads us to a negative effect on the FX with minus 4%. EBITDA is 77 million compared to 60 last quarter, last year's first quarter. And the EBITDA margin improved to 4.8%. The order intake is minus 20, less in local currency, so minus 7%. And the decrease in the order intake is coming from installation. And the high production that we've had during the quarter together with the decrease in order intake then leads to an order backlog that is negative on minus 27% year on year, a little bit less in local currencies, minus 21%. We're actually, both Norway and Denmark has been growing really fast. So we are actually a bit pleased that the installation growth is coming down a bit. Denmark has had the highest growth of all our countries, growing by 42% in the quarter. That leads to a top line of 1.7 billion. The organic growth in Denmark is 20% and from acquisition it's 13%. You can see that we have some positive effects from the currency as well here. The growth is coming both from service and installation. It's a bit higher on installation. The EBITDA margin declined to 4% compared to 4.4%. Leads to an EBITDA of 68 million compared to 52%. And the decline is explained by a bit lower project margins. And as I said, and as we talked about before, both Denmark and Norway has been growing very fast in isolation. And then it's a bit of a challenge to keep up with the EBITDA margin. Order intake is minus 19 and also here there's a decrease in installation. So it's minus 23 in local currency. And this also same as Norway, high activity and a lower order intake leads to a decrease in the order backlog with minus 10%. So order backlog is still high on 3 billion. And then we have Finland. And Finland has also grown a lot, 36%, leading to a top line of 554. Growth here is coming both from service and installation, but has been very high on service, which we are pleased to see. The organic growth was 21%, and the growth from exposition was 6%. EBITDA margin, or the EBITDA was 20 compared to 15 last year and the EBITDA margin was unchanged. Finland had a strong order intake and growing both on services but also on installation. And we're happy to see that because Finland has needed to fill up the order backlog a bit. So order intake plus 51% and in local currency plus 45%. And this also leads to a strong order backlog that is on 1.2 billion and that is an increase of 58%. Finland is also the country where we have the least share of service. But in the first quarter, the service share was 31% compared to last year's first quarter, 27%. So we're also pleased to see that. That was our countries. Then let's look at our net debt and cash situation. And I think we start with the middle there. If you look at the operating cash flow, you can see that it's a bit weaker this quarter than last year on 60 compared to 341. And this is due to a decrease in working capital and the working capital decreased with minus 377 million. And the main reason for this is the strong growth that we have had. So we are tying up capital in receivables. And also the net POC or the net WIP is not contributing mainly because we have had Previously, like a year ago or a bit more, we had a lot of large projects coming in with really good payment plans and prepayments. And they are now facing out and we are not getting any new large projects that can actually compensate for that right now. So it's a bit of a timing issue also. If you look at the left hand side, you can see the financial position. cash balance of 1.1 billion and then we have loans of 1.6 billion and that is that is a term loan long-term term loan of 500 million we are drawing on the rcf 200 million and then we have commercial papers for 900 of 921 million. And then we had the leasing according to IFRS 16, so-called cars, on 1 billion. That leads to a net debt of 1.6 billion. And with a long-term rolling 12 EBITDA on 2.3 billion, we get a net debt LTM EBITDA ratio of 0.7. And on the right hand, you can see our loan structure. And what's worth mentioning there is that we have the RCF of 2.5 billion that is sustainable linked, that is maturing in October next year. So we now have started the work to set up a new RCF. I think that's it on that page. So let's look at our financial targets then. We have, as you know, we have an EBITDA margin of 7% and the LTM is on 6.4%. Cash conversion now a bit lower than as I said on 70%. The net debt to EBITDA ratio is on 0.7. So a lot lower than our target. Sales growth very much higher on 24% LTM compared to 5% which is or more than 5% which is our target. And we have paid out in a dividend 52%, which is our target, says more than 50%. And by that, Mattias, I will hand over to you again.

Thank you. And just a summary to repeat what we think is a good report. And I think it's fantastic to be able to present yet another strong report which we have been doing throughout the year. many, many years now. And today, the summary goes like this. Increased sales, 28%. We are increasing the sales in all countries. Organic growth at 20%, highest number ever. We are growing in all countries. Acquisition is adding another 7%. And we have a slightly lower but very stable EBITDA margin at 5%. And the beta margin is affected, which we have said a couple of times, by an increased cost for developing the business according to plan and according to our strategy, which of course will lead to an even stronger and better company going ahead. Earnings per share, which is maybe the most important KPI, is up 18%. And we have some increased injuries, which is not good. And we are now addressing measures to be able to improve that again. So by that, I think we can open up for some questions. And thank you so much for now. And let's see what you are thinking about and want to know more about. So please.

We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your headset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press the star key, then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Carl Regenstam from Nordea. Please go ahead.

Good morning, it's Carl here from Nordea. A few questions. Firstly, looking at the order intake in Norway and Denmark, down 7 and 23 percent organically. I know it's maybe hard to split out, but could you perhaps give us some more flavor on what is actually in the market contracting and how much is sort of you deliberately taking less projects in order to sort of manage your currently seemingly a bit too high utilization rate in the countries?

I think it's a tough question to answer but overall we as we have said we have had a high growth in the countries you're mentioning and maybe two or maybe if we have had a too high growth which have costed us on the margin side so I think That is the base point or the starting point. Then we have a quite okay order backlog situation which gives us the opportunity to be a bit cautious and a bit peak on what we try to sell and try to get into the order backlog. So overall we still hear an okay demand and I think What the root cause is, if that is a lower demand or that we are more conservative, it's too early to say. But the signals we hear and get is more of that we are growing too much and are a bit too busy. Do you want to add something on that?

No, I think you're right. I think we are being more selective and also when the competition is a bit higher on the price side, we are not getting into projects that are too low priced as we see it. So I think it's difficult to say, but it's definitely that we are more selective.

yeah and more selective in combination maybe that what i'm afraid of and i try to state that as often as i can i think some players in the market underestimates the inflation what impact inflation will have on salaries on the material because A normal situation in our industry is when and if the demand is going down, you can lower the price because you can speculate in buying material cheaper, get slightly cheaper labor, etc. But the inflation environment we're having today, I think this is why we probably see some increased price competition because some not all players understand the impact of the inflation going on right now. So maybe that is part of the situation as well. But normally when they have filled their order backlogs, then we can get and win some new healthy projects instead. That is normally the way it will be handled.

Okay. And on the pricing situation, I mean, would you say that it has worsened um now during the latter part of of q1 entering april as well and and do you see any difference in the pricing situation between the the the sizes of the projects meaning that maybe it's more smaller players that maybe are more worried about the backlog maybe less professional in their in their tendering um yeah

What we hear when I speak to different persons in the industry and ask about if they can pay, for example, if the small players are still able to pay the invoices from some suppliers. I think the answers I get is that the really small players, they are moving into solar panels, car charges, etc. They have handled... the one who is normally building residentials, they are doing something different instead. The one who is a bit stressed or struggling a bit is probably more the medium-sized players who have underestimated the wage inflation and the material price increases the last 18-24 months. I think they are the one who is struggling. Some has already faced some issues and Some of them maybe haven't understood the impact inflation will have going ahead. And we think they are pricing it slightly lower. So if it's increased, I think that would be to go too far to say that. But at least at the same level that sometimes we are a bit higher because as we see, they haven't priced the cost they will have. But again, I will state that and underline that we have an order backlog that is good and time will tell and time will also give us opportunities to win new projects. That's for sure.

Okay, very clear. And also on the wage inflation, you were impacted by the strike in Norway for your fitters primarily, I understood. Have you assessed the impact of sales and EBIT in Q2? And could you also perhaps remind us a bit on your percentage of sales in Norway, which is typically partnering or cost plus, meaning that you could easily push forward the wage inflation?

No, but the wage inflation, if we start with the first one, the impact of the strike, was it 40 million on the top line?

It was 40 million. It ended pretty fast, which was lucky for us.

Around 40 million, let's say between 35 and 50 then. And Norway is 21% of our top line. When it comes to... What was the question, actually? Sorry, Carl.

What percentage of your sales in Norway... That could be defined as partnering or cost plus, meaning that the wage inflation is easily to push forward.

No, but I want to answer the question like this instead. The lion part of all contracts on the project side are having index clauses or partnering projects, cost plus, etc. So we are well protected in that perspective. And we had a 5.2% increase on the salary in Norway, which is pretty much in line what we expected for Norway. So that is also something we knew and have added into most of the tenders that we have submitted the last six to eight months. So I think we might see some impact on the margin going ahead from what you are asking about, but not a major thing. I think there are other things that are more important, how we are executing, what type of materials we're buying, and how well we are managing the negotiations with customers, contracts, etc., and make sure that we are working with customers who can pay going ahead. I think that will be more important than the increased wages in Norway.

Very clear. Thank you.

The next question comes from Carl Norman from SEB. Please go ahead.

Yes, good morning. So maybe if we start off with a question on the order backlog in Sweden. I think it was quite strong, driven by a strong order intake. Is there any project standing out in the quarter or what was driving the strong order intake in the Swedish business?

No, it's not that we can say that we have gotten a couple of large projects. It's normal mid-size, small-size projects coming in. So a good mix. Yeah, good mix.

Okay, and then also a question on the regions. Again, are you seeing, like on Carl's question, on the cautiousness side or the uncertainty in the market, are you seeing any country where you see a higher market uncertainty than others, or is it relatively stable? Because, as you said, maybe the order intake or the order backlog is not really representable of the real demand, so to say. So it would be interesting to hear that. your view on the different markets and if you see anything standing out there.

No, not really. I think maybe we have some bigger fluctuations in Sweden maybe because of the residential market going down slightly more than in other countries. On the other hand, the industrial investments in Sweden are much, much higher than the other countries. But I think it's quite flat if you compare the countries.

Okay, and I guess the last one on your initiatives to drive a more efficient organization with the investments in the IT platforms, et cetera, where they have been doing now for a year or so. Can you maybe give some kind of update on, you said that you will see some positive impact on the margin in the end of 2023. Can you maybe quantify that and give us some kind of information about how we should think about that?

Yeah, I think if we take the personnel we are investing in, it's mainly addressing our ambitions in technical facility management, energy management and building automation, which is capabilities we are building up now, hiring new people that are working and are selling some services but they're not selling enough yet but we think that is a great space to be in and we are investing and hiring because we know that that will be a profitable business going ahead within bravida then if we take the three big investments on the IT side. Of course, we're working with IT security, better IT platform in general, which is needed. Not maybe because we need it today, but if we are not investing in that platform, I think the cost will come in the coming years. So be able to present the margins as we are doing at the same time as we are investing a lot. And I don't think anyone else in this industry sector is investing close to as much as we are doing. So I think we are building some capabilities for the future now. It's about how we can deliver the service better, work more proactively with customers, but also make sure that we can visualise Visualize savings, etc. for customers so we can help them improve their energy efficiency and give us the opportunity to make more money. And there are three different systems. We have the CRM system that, of course, addressing our proactive work with customers. give us better opportunities to cross-sell. 80% of our customers only buying one discipline, for example. Then I think the two systems that are improving our delivery machine in Bravida is the purchasing system. a new system that gives us opportunity that we have launched now in Finland and in Pernod which is one part of Sweden and now in a couple of weeks we're going with the rest of Sweden and after summer we are launching it in Norway Denmark it's working very well and the system is implemented because it should be easier for us to to make sure we are buying from the right suppliers in perspective of the sustainability perspective but also make it easier for new suppliers more international suppliers to which you are buying from already today to come into our one and only purchasing system so we can do efficient purchasing from new, more better supplies going ahead as well. But also in a couple of years, be able to provide sustainability data for the material we have installed in our customers facilities, etc. both in the tender phase as well as in the selling phase and production phase to digitalize our reporting, our footprint of CO2 emissions for the material we have installed. So do that in a digital way instead of using manuals or some kind of calculation is something we think will be a competitive edge for Bravida. Then we have a project management system that of course will improve our execution on projects and make sure that we improve the margin on the installation side, be more proactive, setting in action in projects early enough so we can lower the waste of money on our installation side and that system will be starting to will be launched in the end of this year. So I think the new capabilities on the growth segments we have said will probably add positive in in the end of 23. The procurement system will start to add positively, maybe not very much the first couple of years, but in the long perspective, it will add a lot of values for us. And then the management system will start adding value the project management system will start adding value in 24, I would say. Did I miss anything or so?

Do you want to add something? Maybe that the project management system, it will start adding value, but we will not take the old project into the system. So it will be new projects that starting up that goes into the system. So it will take some time before we see a strong contribution here. And also, as you say, the procurement system is first we replace it one to one with the old system. And then we're going into phase two now in end of next year or so. end of this year and then starting phase two where we are developing new functionalities and then we develop it from there. So it takes some time, but it will be very good when we have it in place.

And just to elaborate a bit more, I think when we started, we decided that we wanted to have a new project management system and a new purchasing system. We thought there would be some standard systems out in the market that we can use, but that was not the case. That probably means that the investments have been slightly higher than we initially expected. On the other hand, that will give us an even better competitive edge because no one else had these systems. So having a procurement system that is unique and also having a project management system that will... give our project leaders our fitters and better position to work more efficient help our customers more proactive see some risks earlier will give us some competitive edges but also i think that will mean that we will be much more even more attractive employer than we are today because we will have the greatest system in the industry. And that is quite good to know.

Sounds like you have a lot going on, so that's good. On that topic, I guess it sounds like you are investing quite a lot right now. So we should see this turning on the margin side from a headwind to a tailwind. in 2020, or a headwind this year, but maybe a tailwind in next year. Is that the right way to think about it?

I think that could be reasonable, yes. But let's come back to that. But I think that is, yeah, quite reasonable, yeah.

Great. And I just put up one more question here. It's regarding the cash flow, which has been, I mean, the cash conversion has been declining over the past years, I would say. And now it was a bit, software here in Q1 as well. I was wondering if there's anything structural that has changed or should you come back to a cash conversion of closer to 100% again, do you think?

That is our ambition, but it has been a bit more difficult to get good prepayments plans now because now money costs. You have to pay for money. So interest rates are higher. But that is absolutely our ambition. But it's very much of a timing issue also. If we get some larger projects in the portfolio, then we will have good prepayments or payments plan and then we will... then it will go up again. So we are working on that. We have a very strong focus on cash flow. So we really want the cash conversion to go up.

Sounds really good.

That's all for me. Have a good day. The same. Thank you so much.

The next question comes from KJ Bonendier from DNP Market. Please go ahead.

Yes. Good morning, Mattias and Åsa. Excellent growth report once again. I just want to come back to your demand comments. Sorry for elaborating on it. But when I read your statement, Mattias, in the quarterly report, you indicate, okay, the construction, looking at the installation kind of demand going down for new construction in the residential sector now spreading into non-resi. I appreciate that these are general comments, but what do you see in the change in your old order mix for the moment? Is that the kind of trends you see coming through or Is it lesser pronounced for you or is this new kind of mix that you're suggesting maybe better for you than the general market mix?

I think overall it's always better to have a strong demand in the market in all segments. But if we look at our business mix we prefer to do anything else than residential for example because the price model is too transparent. We don't have a very high margin in that segment. But I think it's very difficult to say when people ask me about the market, when I'm sitting in my office or when I'm out walking and thinking about the market. It's very difficult for the moment. I hear some who are saying, yeah, but we have high inflation. I start this project now because I don't think it will be cheaper. So you have everyone who's saying it's too expensive. The interest rates are too high. And then you have some other who thinks it won't be cheaper. So I prefer to build now instead because I have the balance sheet to do it. And let's make the inflation eat up some of the costs. So you have the whole spectrum. And then you have residential markets going down at the same time as we have seen some... companies in the industries reporting really strong numbers with high demand. So I think it's all over the place. I think it's impossible to actually guide you or ourselves. But what we see for the moment, it's a quite high demand. And then we know that we have some structural drivers in the market about the electrification, energy consumption, energy efficiency. You have the solar... panel installations, car charges, infrastructures are changing. So there are a lot of positive things as well. So it is really, I wouldn't say a mess, but it's so many segments who are changing and transforming. So it is really interesting to go to the work every day now, I would say.

I can imagine, I can imagine. But I guess when you do this kind of quarterly summons with your branches, do you get the feeling that the number of projects that they're accounting on has changed very much or anything like that or the mix in those contracts for you?

No, slightly high demand for prices still, but then it's another question if they will be finalized and contracted. I think that is another question, but the demand again, it seems quite okay for the moment. There are some variations, yes, but it has always been. I think also about statistics and the answers you get. It also depends on what kind of questions you're asking. I think we ask that question slightly more often today. So, of course, we get some answers quite more frequent that the market is tough today than six months ago. On the other hand, we didn't ask that question, maybe not at all. Being in many places, working to customers in many different types of end markets is, of course, the insurance portfolio, as Åsa says. I'm sorry I can't answer your question better than that, but it's okay for a moment. Let's see what happens. But it's still 90% of the market that we don't have today. So plenty of opportunities if we work close enough to our customers.

I appreciate the extra color. And thank you very much for the color also on the system side and the IT investment. Just to make it clear, the 24 million that you describe as a non-recurring cost in the quarter, is that when you get to breaking points, so to say, where you start to use a new system and then you write off what is remaining on the old system? Or where does those 24 million come from?

I think 24, in total it's 34 and 24 is non-recurring. And that is non-recurring. Then to some extent, maybe there will be some new cost licenses that we don't see today. But this is as good as we can specify today. But 24 is non-recurring today and the other 10 is recurring.

Okay, but all of them are cash elements, so to say, if I understand it right. So it's cash out. Yes. There's not the question of writing off old things in this number.

No, no, no, no. It's cash out, so it's cost taken on the P&L.

Okay, so that number correlates with the 100 and 125 million that you specify for the outlook for this year.

Exactly.

Some of that 100... It's a non-recurring part of it I didn't really understand, so...

The non-recurring part is what Mattias said. It's the investments that we do in the systems. Mainly these three systems and some other ones. We take them in the P&L. There is a small part that we actually accrue on the balance sheet. So there will be some of this 120 will be accrued, but it's not the main part. So the main part it's taking through the P&L. Is that clarifying it? Not very clear.

Yeah, and I think if I did some calculation this morning, if you should, we are not adjusting, but I think that is equivalent to 0.3% units on the margin, the non-recurring investments we did in Q1.

That's fine. That's fine. But non-recurring for me, that means more that you would have thinking you're just taking it over the cash flow rather than taking over the P&L. But it's still a real cost. That's what I was after.

It's a real cost, yes. So it's cash flow and P&L, yeah.

And just also to come back to the cash flow, have you seen any change yourself in payment patterns for clients or is the working capital buildup just really related to the exceptional growth you have for the moment?

We hear that it is a bit more difficult. We haven't really seen it. It's more that we haven't gotten any large projects in the portfolio for the last period. So it's more that. So I think it's a timing issue. And the main reason this quarter is the high receivables that we have from the growth.

And it's the same impact that we see coming through in the contract balance net that is less negative than it used to be.

Yes. Yes.

Excellent. Perfect. Thank you very much. And all the best and good luck out there.

Thank you so much.

For any further question, please press star, followed by one. Madam, gentlemen, so far there are no more questions.

Okay. Thank you very much, everyone. And enjoy the day. And just to make sure that you will tune in and listen next time, we have our next report in July, 14th of July. So let's see what kind of set of numbers we can present then. But we have a lot of work to do before that. So thank you so much for listening and see you soon.

Thank you. Goodbye. Have a good day.