Careium AB (Publ)

Technology-enabled care is what Carium is all about. Carium published their year-end and Q4 report earlier this morning. To add some color to the numbers, I am pleased to introduce CEO Christian Wallén and CFO David Granat. Welcome.

Thank you. Thank you.

What are you most proud of in this report?

Oh, I think the number one thing that we are the most proud of is the development in the UK. If you have followed us for some time you will see that for the past couple of years a lot of issues have been related to that part of the business. While improvements have been steady, I think we mentioned last Q3 report that we've had four consecutive quarters of service growth. we do see a very, very fine outcome from the UK business for the fourth quarter, which we are very happy about.

I understand you. And after the presentation, there will be a Q&A. We are joined by two equity analysts and viewers can ask their questions in the live chat. So by that, please go ahead with your presentation.

Thank you so much, Mattias. Warm welcome again then to the Carrium Q4 of 2024 and year end report. As stated, I'm Christian Wallet, CEO and president of Carrium, and with me is my colleague David Granath, our chief financial officer. So warm welcome and let's open up with the highlights of the fourth quarter and the year end, if I may have the next slide. Oh, I wasn't given the magic clicker. If I can manage it myself, hopefully I can. All right. So first off, we are of course very pleased to present a positive quarter and a return to growth with strong profitability. We have issued the guidance for the year and we are pleased to note that we on the growth side come in at the lower ranges but on the profitability side deliver an outcome for the full year that is in the upper ranges of the guidance. And on a very personal level for me and the entirety of Carrium, we close the year with over half a million senior people all over Europe that are dependent on our technology and services to live really rich, safe and active lives. And I think that's absolutely amazing. And as we look to the many good years to come for Carrium, of course, a huge milestone for us is to attain one million people served. So we're really happy to see that we're now halfway to what is very near and dear to us. And with the highlights out of the way, let's head over to sales and gross margin for the fourth quarter of 2024. So in 2024 the fourth quarter organic growth amounted to 14.8%, 12.5% if you adjust for currency. Sales were strong in all regions save for the Nordics and in the Nordics was particularly Sweden that was a bit of a drag due to a big framework of agreement that the market is waiting for that will be in place in the first half of 2025. Service sales increased 7.6 percent to 165.9 million compared to 154.1 in the same period of 2023. Product sales increased 39.1 percent up to 63 million which is up from 45.3 in the same period of 2023. The main driver of this increase was of course the UK business coupled with our operation in Germany or DASH as we like to call it. We delivered a gross margin at a very good 44.4% up from 40.2% in the same period last year and this was very much driven by the regional and product mix making up the sales. And with that we head to our markets in more detail. So first off, our business in the Nordics saw a sales decrease with 7.4% compared to the same period in Q4 2023. Service sales declined 6.7% to 87.6 million down from 93.9% in the same period last year. Product sales meanwhile declined 16.1% amounting to an outcome of 6.9 million SEK here in 2024 Q4 compared to 8.2 in the same period last year. Our business in Norway developed very nicely in the period, so the main decrease is attributable to this Swedish business. And it's a combination of factors. As we mentioned, it's the 2G and 3G delay and the impact it has on customers. But it's also the fact that the majority of the business in Sweden is done on a framework called the ADA. and that framework is to be updated with a new version towards the end of the first half of the new year. So, naturally, there is a little bit of hesitancy in our customers not bringing so many contracts to the market. We probably expect the situation to be slightly different in the other half of 2025. The decrease in gross margin that readers might have noted is mainly attributable to the lowered sales. And with that, we turn to the UK, which, as we have said many times, is probably the number one market for technology-enabled care in Europe. It has the highest level of penetration and also the biggest volume in terms of revenue. So sales increased 19.8% compared to Q4 of 2023. Service sales were at 51.3 million up from 42.6, an increase of 20.4%. And product sales amounted to 29.5 million up from 24.9 in the same period last year, an increase of 18.8%. Gross margin positively improved following the higher sales and effects of the product mix also. With that we turn to the Netherlands. The Netherlands, as usual, delivers consistent and strong sales growth of 27.4% compared to the fourth quarter of 2023. Service sales grew by 37% up to 21.3 million from 15.5 in the same period of last year. Product sales declined but from very low comparable levels. The Netherlands market is mainly a services-based market. The gross margin came in at 62.8 up from 57. While this is great and part driven by scale and sales of course, it is also something that we see in the Netherlands where it swings a bit. For other markets, which primarily consists of Dutch and France, we have Spain in the mix also, but as we have communicated, Spain is starting from very, very humble beginnings. Sales increased an impressive 149% compared to the fourth quarter of 2023. Service sales increased 175.1%, up from 2.1 million in Q4 2023 to 5.7 million in Q4 2024. Product sales came in at 26.1 million SEK, up from 10.7 million SEK in the same period last year, which is effectively an increase of 144%. Gross margin improved to 60.7% up from 47.4% in the same period of last year, mainly driven by the product mix. Now, of course, these are fantastic numbers. We are super proud. Our teams in France and Germany are doing a phenomenal job and we are really appreciated by the customers. But I'd like to also remind viewers here that the Q3 of 2024 was fairly soft for the other region. And with the smaller markets, we tend to have these swings. I think we said that in the third quarter also. And with our markets out of the way, I hand over to David to talk us through the profitability. You get the magic remote here.

Thank you. Yeah, thank you, Christian. And now an update on the profitability for the quarter. EBITDA amounted to 44 million compared to 35 for the same period last year, giving an EBITDA margin of 19.1% compared to 17.8% last year. EBIT was 27 million in the fourth quarter compared to 17 million last year, reaching an EBIT margin of 11.6%. As we communicated last quarter, we saw an increase in depreciation following the launch of the iCare Center. Despite this, we see good development on profitability, mainly driven by growth in sales, positive product mix and improved efficiency. In Q3, we secured profitability despite low sales. And in Q4, we showed our ability to boost profitability with higher sales. With that, moving on to cash flow. Cash flow from current activities in the fourth quarter of 2024 amounted to 35 million compared to 54 for the same period in 2023. Working capital increased 7 million in the quarter, in line with sales. However, during the full year, Carim increased its net working capital as a percentage of sales. This is partly due to increased financial lease receivables. Free cash flow was 70 million and over the past year we have accumulated 37 million of free cash flow. Cash totaled 32 million and the bank overdraft facility had unutilized amount of 50 million resulting in available cash of 82 million at the end of the year. Net debt decreased to 165 million at the end of the quarter compared to a net debt of 194 last year. Leverage was 1.1 to be compared to 1.4 for the same period last year. To summarize, we have sufficient cash generation to pursue our strategic opportunities. And with that, I hand over to Christian for some summary and conclusions.

Thank you, David. So since this is the fourth quarter, it's also time to kind of summarize the year. And for us, as we look back to 2024, we see that we delivered sales of 871 million up from 825 in 2023. A growth of 5.6% which I personally believe is a fairly strong outcome given a lot of the headwinds that we've had with prolongations and delays on infrastructure changes and so on. EBIT for the full year amounted to 84 million up from 59 million in 2023 which I think is also reflective of all the hard work in developing ourselves as a more efficient business. So really proud of that outcome. Free cash flow, David mentioned it just now, amounted to 37 million SEK down from 62 when we compared to the last year. And as David mentioned, it's also a little bit of a tie up here in the working capital and the leasing receivables. So from our view, we think it's a really, really solid year. Namely, the strong profitability is indicative of our performance. The net sales growth, yes, it was a challenge. We saw it in our two main markets. All the ones unaffected by this market specific issues and challenges did really, really well, which is great. And on top of that, I think 2024 was such a landmark. We launched some new products and some new solutions that will be absolutely integral to our future success. And chief among them, I would name the mobile social alarm for the sort of out and about or perhaps slightly younger senior and the eye care center, which is a huge part of our technology foundation going forward. Basically the digital backend that enables us to provide these great services and technology and orchestrate all the activity on it. So really, really good year and I'm really pleased to close it. In concluding remarks then, for the fourth quarter we thought that growth was good with the UK product sales showing really good positive development. We saw phenomenal development in the other segment, the Dutch and the French. of which we are very proud of course and we attained the guidance on the lower range of the growth but on the higher end of the profitability the challenges that persisted in q4 was obviously the impact on the sales in sweden but adding to that we can also see that the upcoming new ada 2025 as it is known it probably creates an effect where people are waiting a little bit to see what it will be like I think that's fairly reasonable and something to expect impacting the first half of the year. So our priorities going forward is a strong focus on keeping the UK product sales high, working with the Swedish customers to mitigate as much of this delay as possible of course until we are sort of on greener pastures on the other end of a new framework which we expect to be a part of. As we mentioned in the report for the fourth quarter, yes, the great performance we need to focus and work actively on in our current business. But it's now also time for us to truly get serious about looking to expand our presence in adjacent markets, such as the assisted living market, to be much stronger in the direct-to-consumer side. We service a lot of end users in a direct relation today. We can do that a lot better. And in addition, we are also opening up to exploring and evaluating acquisition opportunities. So as you can see on the bottom of the slide, as we look forward to the next year, last year we presented our guidance for the upcoming year as part of the Q4 presentation and report. And for 2025, we expect our net sales, our profitability and our free cash flow before acquisitions to increase compared to 2024. Due to, as previously mentioned, the impact of the Swedish market, which is of course big for us, awaiting this new major tender framework, this is where 80-85% of all business in Sweden is made, we expect the first half of the year to be softer and the second part of the year to be stronger in terms of the guidance. And that concludes the presentation and we would be happy to open up to any questions.

Thank you so much, Christian and David. And we will now present Jakob Lembke of SEB, the bank. Please go ahead with your questions, Jakob.

Thank you. I hope you can hear me well. So starting off on the gross margin here in the quarter, which is very strong across all regions, except Nordics, I would say. Is there any particular like high margin product driving that or anything else structured such as better efficiency, better contract pricing or something like that?

I can answer that. I think it's a combination of a lot of things. It's everything from renegotiating certain contracts. It's a favorable product mix. Some of our newer technology, we are smarter in the manufacturing, so it has a good impact. It is also, and I think this is something that is at times forgotten with us, the more we drive the sales, the greater we can push the pricing on production and components and so on, which is a very, very interesting play for us. It takes some time to reach volume thresholds for when the effects come in, but we can see it on some of our product lines, which is, of course, very favorable. But also the high sales, obviously a big factor also.

And then On the outlook, you mentioned that H1 will be weaker and H2 stronger. And I understand that it's mainly driven by the dynamics in Sweden. So just looking at Q1 and Q2 here, should we see it as sort of that Q4 is the sort of bottom level and it will be flat growth compared to Q4? Or is it risk that sales sort of deteriorate further from the Q4 level, you think?

Well, I mean, that is a little bit depending on how the market approaches this. I mean, Sweden is very important for us. And of course, if the majority of the business is done in a framework environment and that framework is to be updated, I mean, if I were a Swedish customer, I'd wait, so to speak. That doesn't take away our existing contracts and work that we are doing. So in terms of guidance, what we conclude for the full year is of course that we expect to do better and have good confidence in our ability to do so. But we do note that this will be a slightly softer first half and then the second half is to improve. However, on your question, if I understood it correctly, will there be a continuation of Q4 onto Q1 and so on? I think if you look historically, the Q1 tends to, in a comparable sense, be a bit softer than the Q4. So I don't think it will be the same story rolling forward, but I think the better comparison is Q1 of 2024.

But just to understand it, Let's say there are limited activity in Q1 and you implement no new contracts. Is the risk that sales sort of decline further than from the Q4 level in the Nordics?

Yeah, there is always a risk. On the other hand, we have really good performance in our Norwegian business, growing really well. So let's see when we summarize the quarter. I think it's actually too early to tell. We have a couple of these opportunities. I mean, they are obviously always fully transparent when it comes to these tender-based markets that we see in the Nordics. For example, we secured and won the Helsingborg contract, which is a pretty big one. as part of our Q1 activities thus far. So I think it's too early to say.

Okay. If we then move on to the UK, very good to see the return to growth in the quarter and particularly the service sales, I would say. And just looking at the step up here compared to Q3, is there any new contract that has been implemented or is it price or what drove that shift?

So the UK has seen a lot of really good contract wins throughout the fourth quarter, which is great. But the majority of those are not yet to be implemented. That happens in 2025. So we don't really see any meaningful revenue from those in the Q4. So it is majority good sales, good activity with the customers, also perhaps a little bit of this hesitancy that is slowly fading away. People realize that there is a real urgency, you can't wait. Because what happens when you wait in the context of the UK is that things are not the same. They are actually deteriorating in terms of the service level of this infrastructure that are types of solutions or the ones that we hope that customers switch from. They actually deteriorate. So customers get more and more challenges and issues. So hopefully there's a bit of light in the UK product sales tunnel. But we also see good development in Sweden. We've made some adjustments in our UK organization and created some other focuses for certain talented people. And we can see some good effects coming out of that already.

Okay. Then on your ambitions to expand into assisted living, it would be interesting to hear just sort of the way you will enter the market. Is it, you know... through winning a larger tender or is it more of maybe going to the private providers or how you will enter the market and also the sort of timeline before you think it could contribute with anything.

That's a very good question and As it stands today, we operate about five what we call pilot sites, which are fully blown, fully operational senior homes that we are servicing. We do a couple in Sweden. We do a couple in the UK. They are slightly different in terms of how senior care homes are set up. They follow different kind of rules. ways of doing senior care. So what we expect to do, since the markets are a little bit different in Sweden, it will be to enter into a framework for assisted living solutions, which is where the majority of the action happens, so to speak. That one is currently out for companies like us to bid on to and become connected to. The hand-in date, I think, is in March. So it's fairly close. And in the UK, which, while a lot of the business is to the public sector, the local authorities and councils, it actually works much more like a B2B environment. So it's very much a sales activity related to our already existing customers to see what needs they have. If we go to the TSA, which is the industry organisation in the UK, They point to, out of all the care homes or facilities in the UK, about 20-25% of them are on digital solutions. The others are on ancient analog technology. And if you compare that to the individual living or the dispersed living, people living in their own homes in the UK, about 40% are assumed to be on digital infrastructure or solutions. So while there are fewer care homes, they are actually even more behind in terms of this digital shift. So we've developed some solutions. I know it sounds very tiny, but we have a really good site running in Monmouthshire, which has become a place where a lot of potential customers actually come to visit and look through how we've set things up because it's really smart and it's really good for both the seniors and the customers. So we have some innovative thinking that we want to take even further. So it will be market by market. We will probably focus mainly on Sweden in a tendered sort of go to market route and in the UK more in the B2B, but B2B style business to the public.

Okay. And just, I mean, if there's tenders out now, you could potentially then win a tender this year and maybe see revenue contribution late this year or next year.

Yeah, and assisted living works a little bit differently. It's kind of business profile is more that you start out with a lot of installation because that is required when you set something up, you are doing something to the facility and making sure that everything is configured and set up. So you have more of a sort of upfront component to the revenue and then you have the recurring part, which we love, of course. And then you also have a different kind of sort of follow on sales. It requires maybe a bit more activity and close work with the customer at the facility. But what you do is that you implement additional solutions based on what you discover and also based on what type of seniors are in the care home's care. Because the needs can be quite different for different types of technology depending on their condition and state. So it will be really interesting for us. We look very much forward to it, but we are at this sort of explorative stage where we are an operator. We want to own the customer as always, but we are learning a lot as we go along and so far so good.

Okay, and that's all on the assisted living. Just a final question on other markets. I feel like it has been sort of a breakthrough year here in 2024. Maybe you can just share what you think has been the success factors behind that and also how you look at 2025 now with a quite strong year here in 2024.

So I think what makes me really proud about the development, apart from the fact that we have great people and we have taken on more great people, something like Donald Trump there with everything being great. What we did was that we made a strategic decision in 2023 where we said that if we want to really become the number one company in the sector in Europe. We need to have equal capital allocation and focus to the highest potential markets. And if we're a little bit self-critical, we've been very Nordics focused. That usually happens to Nordic companies, so it's nothing strange. But for us, it was really important to say, let's put the needs of these really, really strong markets, the Dutch, the Frances, the Spains, let's put them slightly more ahead. of the known and tried and true where we already are strong so the major contributing factor to the success is the fact that we've made a lot of adaptations to adapt our portfolio and our services to be more competitive in these markets and thus far we've clearly seen a very good response to that But it would not have happened without the great people who are doing their job in these places. So it's a combination of those two. But it's very intentional. And you are always, as a CEO, you are always the happiest when you can see that you, together with the management team, you decide on something. And then maybe it takes a year, but you get to see the outcome of that decision. And I think this is one such story.

And it sounds very promising and sounds like you've done the right decision. And on that, just Spain, you think that is something that could contribute in 2025 or is it too early still?

Well, Spain, I think we said that in the Q3 when we announced that we had set up sort of commercial operations or reopened them, that we expected it to contribute in 2025. Now, what I would perhaps myself think is a bit interesting with Spain is that it is very binary. It's very hard to put a number onto how much revenue is to be generated because Spain is kind of all or nothing. Either it's zero or it's a whole lot. so in that regard i'll stick to saying that they will be contributing in the year but to the extent or how daring we we are to be that that is too early to say we're doing a good job we're having the right conversations sometimes the the tendered opportunities in spain they they are so big you can't you know you can't win it all but you win a fraction of it So let's see. Our intention is of course to have Spain contributing positively in 2025. It's also a very, very important market for telecare. As I've said many, many times, one of the benefits of being in these different market contexts It's challenging for us as a company, but it's also extremely good because all the demands are slightly different and all the markets do things in a way that we would be happy to put on export to some other market because it will give us an advantage. So Spain has a very interesting model. They are a lot more proactive. They are a lot more sort of outbound in how they view how technology-enabled care is applied. So it's a lot of interesting things to learn from that ecosystem.

Okay, sounds good. That's all for me today. Thank you very much.

Thank you. Thank you, Jakob Lenker of SEB. And we move on to ABG Sundahl Collier and Alice Beer. Please welcome and ask your questions.

All right. Hi, thank you for taking my questions. So just first on the market in general, I assume that everyone in this space is affected by the market delays. But could you give any color if you're taking any market share or if everyone is equally affected?

Oh, in Sweden, you mean in relation to this framework there?

Yes, both the framework, but also just the infrastructure release in the UK.

Absolutely, absolutely. When we talk to our sector colleagues, it's more or less the same for everyone. And while we are the only, I think, listed company in this business, we have a competitor called Legrand, who have a subcomponent, a huge French conglomerate. They are also public. But I think the best indicator of things was Townstool, who is by far the largest company in our sector all over Europe. When their financial reports, broken year, were released a couple of months ago, their growth was flat. It was zero. So I think that speaks volumes to how everyone is impacted. And they are a UK company and are by far the, in terms of market share, biggest entity in the UK. So I think this goes for everyone.

All right, thank you. Very good. A couple of questions on the OPEX and costs. You wrote that profitability improved partly because of your work on efficiency. OPEX was slightly down as a percentage of sales for the full year. Is there room for more cost efficiencies or should we expect OPEX levels to increase to support growth?

No, I think for us, You could argue that it's a bit boring that you consistently state that it was due to efficiency, but that is the reality. We are very, very hard and serious about our work in constantly getting more and more efficient. If you look back to the story of Carrium as a standalone entity and all the challenges that we faced from the onset, a lot of the gains made, the lever for that is to be really efficient and really focused. So we always think there is more to do. And of course, we are always running projects on a market by market basis where we can see that we have efficiency gains to be had. And of course, if they are miniscule, perhaps we aim for bigger fish. But that we will be constantly working on. And we haven't even entered into, you know, how can AI make us more efficient and all that stuff that everyone is thinking about. So we're still working with basics and we still think we have a lot to do. So really looking forward to that. In relation to the OPEX, a little bit dependent on where the cost lands, of course. As we have signaled, we want to make sure that we retain our sort of number one position as the technology leader because we are at the heart of technology company. I mean, half a million people are dependent on our technology, and that goes for the digital side, the hardware, the firmware, and so on. So we want to make more investments into our technology because we see that it's at the pivotal shift. Everyone is moving to digital. They are not fully there yet in some of the markets, but that also opens up to so many new possibilities that we want to capitalize on for service design and delivery and increased ARPU and what have you.

all right thank you and just really moving on from that then because you know the increase by 36 for the year i think is that a lot due to the eye care center and what should we expect from r d going forward is this a new run rate level or should it decrease

Well compared to some other companies who might have, I mean we are very much a real company, we fund ourselves. So we fund our own journeys and thus we need to be very disciplined and focused. We do see a willingness, both from management and board and based on our strategy, to increase our investments into R&D. But I think the promise to all shareholders is that we will do so very responsibly. As you might know, we have a new CTO who joined now during the late autumn, so to speak, for winter. And we're already seeing the effects of what does it mean to work in a more efficient manner, more focused. Yes, we need to bring some more people about. But in the greater scheme of things, I think the investments are nowhere near where they are not offset by us working really hard on the efficiencies.

All right, thank you. Just one more question on OPEX. We saw an increase in admin costs for the first time in, I think, eight quarters. Your headcount expanded a bit in other regions, decreased a bit in the UK. How should we think about admin costs in 2025?

So I think the admin costs... As you've seen, we've had this great growth in the other regions. And of course, we also want to build a sustainable organization around that. So we are extremely fortunate in that we've been able to source some, we believe, maybe strongest talent in these markets in our sectors. And they actually want to come and work together with us on our mission. So that obviously increases the costs a little bit, but we think it's for a good reason. It's probably not sustainable to have this crazy level of growth without increasing costs somewhat in the other markets.

Makes sense. And on cash flow, could you expand a bit on the cash flow and specifically how we should think about the increase in financial lease receivables?

I think that question has David written all over it.

Yes, thank you. I would say, I mean, one reason that the cash flow increased in 24 is due to the financial lease receivables. It's also connected on how you will see the sales develop during 2024, where we see it's a little bit maybe softer in the first half of the year. It's dependent on if we classify a lease contract as operational or financial lease. We see that it's going to be developing kind of the same, but as we put in the guidance, we also see that the free cash flow is going to improve over the year. So my guess is that working capital will kind of be in line with sales increase.

All right. Great. Thanks. And you've talked about this before, but your work on unprofitable contracts in the UK, just looking for updates as the number of connections was down again. How much has been done in 2024 and how much is left to be done?

Well, I think when we close the books on 25, I think we will not be saying this anymore. So we still have some work to do. Contracts have, you know, in the UK, they work a bit like this. They are fairly short as you enter into them, but they have quite good prolongation opportunities. And that... compared to Sweden where you might have a slightly longer contract as you enter into it but when it's done you need to basically go out to a new tender. That is more flexible in the UK. This means that you can also argue on the pricing and so on. So I think for us it will continue for another while. There are also some contracts that we know that they have to be re-tendered and we are not guaranteed to win them as it's fierce competition in the UK market. So I would expect them to maybe drop a little bit more. But when we close the books on 25, then I think we have to say that we are done. It's possible also that they increase. The situation in UK is such that some of the contracts that are out there, they're also incredibly big. And winning one of those would basically have quite a substantial impact on the number of connections. So I think it's a little bit hard to say. We are too early in the year to really have a firm opinion. As I think we have communicated to the market, we are not of the opinion that just having connections is the right way forward. We'd rather have the right connections. And I think a better metric to really understand the impact of Carrium, and of course with a very clear connection also to our financial performance, is how many people are actively reliant on hardware or services from us. Currently that's at 515,000. all over Europe, maybe that's a better metric to report. As we always do, we only update our report structure with the first quarter of the new year. So let's see what pops up in there.

All right, understood. Very good. And I just have one final question. Your leverage is down quite nicely and you've had strong, solid free cash flow for two years now. Could you share anything more about your plans for your capital allocation?

Yeah, so I think as we now communicate, we have a couple of areas here where we see that we do believe that we can do a lot better. The assisted living side, we have the direct to consumer side. We also have investments going into our R&D, of course, and building the ecosystem that we want to enable customers to move quite freely within. But aside from that, as we now clearly state, we've hinted at it for a couple of these calls. It is now time for us to also look to the inorganic growth opportunities, try to see which ones are there. What opportunities do we want to explore or pursue? And that is obviously a part of the capital allocation.

All right. Well, thank you for taking my questions.

Thank you so much, Alice Beer of ABG Sondal Collier. And I know you have another meeting scheduled. We have to raise some of the viewers' questions anyway.

We love the viewers' questions.

Yeah, first of all, last time you were here in Q3, you mentioned we had to talk about an important contract in Norway. How did that end?

Oh, yeah. It hasn't ended yet, put it that way. So this was the second biggest contract in Norway. We bid on it together with two partners. So we were three together, all doing our separate parts of it. The current incumbent was, I think, five entities together. So this is quite complex. And the situation is actually that we won the contract, but it was appealed. So it is now in the Norwegian court to see what happens with it. This is quite common in Sweden. Appeals are nothing strange in Sweden. In Norway, it is super rare. So this barely ever happens, which is interesting. But the verdict gets to come Friday. So hopefully we'll know tomorrow.

So it could be a really good week from just very good.

Who knows?

Okay, and then we have this question. The gross margin in the UK is increasing by five percentage points sequentially. Is this due to the reduced customer base in the UK or temporary product mix effects?

I think it's more to the product mix, I'd say. I mean, if we look, if we roll back the clock not to 23, but earlier, we could see that product sales in the UK were extremely strong. In 22, even on the challenges there, in 22, 23, we had really good product sales up until the point where these prolongations were announced. So I think that is one of the main drivers that that component is, of course, bigger.

And another question. The service sales in the Nordics are down 6% sequentially. This is despite a large order from Norway. Have you lost a major customer or is it many smaller customers that you have lost to competitors?

No, it's more to David's question on the classification of how we are forced to take a contract in Sweden. It's set up in a way where you bundle the connectivity, the monitoring services and the hardware. And for some of these contracts, we have to classify them as either operational or financial leasing. And that has implications on the revenue recognition. So Sweden is very much unchanged. It has not lost a lot of contracts. It's rather growing pretty well and having a very, very good win rate. But from a revenue recognition standpoint, it is something where you could have a bit of a swing. So it's more of that effect that we're seeing.

Thank you. And one last question. Last year you provided a clearer guidance for the year. Why have you shifted to a more vague forecast this year? Is H1 expected to be weaker compared to last year?

Well, a week here we would not like to have. Of course we want to do better, but we want to perhaps also being a little bit respectful of how we approached last year. We came into the year with a very clear guidance and of course we thought we could do maybe even better. But what faced us during the year was of course that we had a lot of headwinds that we could not control. These sort of delays and those things that had a real effect on our ability to perform. And thus we were forced to revise the guidance. So we genuinely feel, we have very strong confidence that we, on three metrics, the sales, the profitability and the free cash flow, will do better. We do think that the profile for the year will be that it is a softer first half, mainly related to the Swedish situation, whereas we expect the other parts to do pretty well. Whereas in the second half, we do believe that things will be pretty strong. So yes, it is more vague. That is correct. However, I think it's more appropriate given what we had during the last year.

Okay, thank you. And that will conclude today's broadcast. Thank you, Christian and David for participating.

Thank you so much.

And also, thank you, everyone that has been viewing and please welcome again in about three months.