Catella AB (publ)

Thank you. Good morning, everybody, and welcome to Catella's interim report for the third quarter of 2024. My name is Daniel Gorosh, and I am the interim CEO of Catella Group, and together with Michel Pichet, CFO and Head of Investor Relations, we will walk you through the highlights of the quarter. After the presentation, we will open up for Q&A session, and the material and reports are, as always, available on our website. So I'd like to start the presentation with a brief overview of Catella, starting on page three. Catella operates in three property-focused business areas, investment management, principal investments, and corporate finance. We manage over 150 billion Swedish kronor in our pan-European investment management platform, and a bit more than 70% of the assets under management are managed in property funds and a remaining part in a significant number of asset management mandates across Europe. Principal investments is where we invest our own equity into a broad and diversified portfolio of European investment projects together with partners. Most of our own investments are managed by our own asset management companies across Europe, managing our financial partners investments as well as ours. and then generating additional fee revenue streams besides our targeted returns on our invested capital. Corporate finance is our real estate advisory and brokerage arm with leading positions in our five large European countries. And corporate finance is also an important advisor to our other business areas, investment management and physical investments. Our operations are taking place from 25 different offices in 12 countries within Europe, and we have approximately 500 employees. So with that brief introduction, I'd like to start this quarter's presentation with a short market summary on page four. In the second quarter, where we experienced some transaction volume recovery, mostly due to seasonality effects, the transaction activity decreased slightly now in Q3. with industrial and logistics being the most sought for segment from investors. Looking at valuations of European real estate assets, they seem now to have stabilized after declining over the last two years. And I, together with some European colleagues, recently visited one of the largest real estate fairs in Munich, Expo Real. And our summary of those days were just compared to six months ago. there is now a significantly stronger and well-founded interest in finalizing transactions. We see the cost of capital coming down, pricing meeting buyer and seller expectations, and we optimistically believe that we are in, or very close to at least, the turning point now after two challenging years. Currently, however, overall transaction volumes as well as capital inflows in the European restate market continues to be low. And Catella has taken and continues to take necessary actions throughout this downturn in the industry. We have preserved liquidity and a strong capital position. And furthermore, we have realized material cost efficiency improvements and preserved AUM in existing funds, as well as launching new product initiatives. With these efforts, Catella is now in a better position today than when now the market slowly recovers. So with that brief market backdrop, I'd like to move on to the next page, page five, for a summary of our key operational highlights of the quarter. Even though the market continues to be quiet, we continue to focus on adapting and evolving our business to increase efficiencies, securing existing assets under management, and preserve a solid liquidity and capital position. During the quarter, one of restructuring costs of 13 million impacted the result. Taking this into account, the EBIT was unchanged year on year, despite the 10 million decline in net revenues. As mentioned, we continue to have a strong balance sheet and liquidity position. And during the quarter, we have also issued a new bond under the newly established MTN program and Green Book framework. The issue of 600 million was met with strong investor interest, and in parallel, we tendered over 300 million of the bonds maturing in March next year. And with forthcoming divestments that further will strengthen our liquidity, we will also review the remainder of the bond maturing in March 25 during the next couple of months. Moving on to investment management, the AUM was unchanged compared to last quarter. when taking revaluation and FX effects into consideration. We see this as a sign of strength in the current market where capital inflows in our core property funds business remain limited, but outflows as well are very limited. So this in a market where competition is facing significant redemption requests and where some funds also have closed. The largest growth possibilities we see today is within asset management operations within our investment management business. Here, we have signed new mandates managing underperforming assets and assets which require repositioning. In recent quarters, we have seen growth in these types of mandates in Finland and in the Netherlands and continue to see additional opportunities across Europe. where we see that our investors value our group's know-how as well as our strong local competence. So the growth in AUM through asset management proves the resilience of our business model in a weaker and more hesitant transaction market. So in order to create a stronger, more efficient and larger fund platform in investment management, we continue to work combining our two fund companies, Catella Residential Investment Management, CRIM, and Catella RealSafe AG CREAG. We expect that this merger will be finalized by the year end, resulting in a joint 10 billion euro fund platform, leveraging capital raising, coordinated investor relations and research, as well as a fully focused and efficient back office and fund administration for Catella and external partners. Looking ahead, new product development and sales continue to be a priority, but we are humbled that despite We see strong investor interest. Capital raising takes time, and much longer now in today's markets. If we then turn into principal investments, primary focus there is to remain on completing existing projects and positioning the assets for sale. Our largest project, Cactus, was awarded Europe's best tall building during quarter, and this award further emphasizes the attractiveness of this landmark object in central Copenhagen. Besides winning this award, we continue to make progress in sales discussions with investors. Looking ahead, we expect the sale of our logistic development project in France for Luxys in late November, and this investment will further strengthen our liquidity within marginal profits. Total investments in principal investments amounted to 1.85 billion at the end of the quarter, and this is an increase of 350 million since last quarter, mainly as an effect for us deciding to replace expensive junior financing in Cactus with less expensive capital through a shareholder loan. And finally, corporate finance. As I initially discussed, transaction volumes fell quarter on quarter, but market sentiment seems to be recovering. With a bit of optimism, we could see a stronger Q4, and we are currently building up a strong pipeline, which indicates a promising start of 2025. And as I mentioned, my personal reflection from Expo Real is that we've gone from a market where everyone was trying to figure out what everyone else wanted to do to a market with real and initiated discussions with new potential investments at the good entry points. At the same time, most of the larger real estate companies have managed their leverage and with a lower cost of capital going forward, as well as expected increase in rents, we see that valuations have stabilized. yielding an improved fundamentals for transactions now to finally pick up again so let's move on to page six for a summary of the group's consolidated results net revenue decreased by 10 million explained by lower transaction activity affecting all business areas as described one of costs amounted to 30 million in the quarter and taking this into account the ebit was flat year on year despite the lower revenues. Excluding run-offs and depreciations, costs were 16 million lower year-on-year, showing that efficiency improvements also are reflected in our numbers. Investment management, we see that the AUM was flat after taking the FX and revaluation FX into consideration, and AUM in funds remained stable, which is quite an achievement, I must say, in today's markets. But importantly, we continue to gain traction in new asset management mandates. Despite a slower transaction market, the underlying business model continues to perform and we maintain our focus on improving our margins and developing new products. And in principal investments, it was yet another quite Quite quarter, but one divestment is now planned to take place in Q4. We have ongoing dialogues to find the right investors for projects that are finalized or are close to being finalized. In corporate finance, we experienced yet another weak quarter as an effect of the slow transaction markets. We see increased activity, especially here in the Nordics, but continental Europe and especially France continue to be very weak. The repositioned corporate finance at the lower cost states provides good opportunities for growth profitably when the cycle finally now turns. If we then move on to page 8 to discuss investment management more in detail. Having the slower growth of 2023 and 2024 in mind, the business area has since inception delivered a strong average annual growth rate of nearly 20%. During last year, as well as this year, organic growth has been muted. But again, we see this as a strength and a continued investor confidence in the current market backdrop we experienced and continue to experience. In the funds business, we have retained the capital with limited outflows. At the same time as asset management mandates have reached their maturity, we have replaced these with new mandates. New mandates with a new focus where we aid investors to manage underperforming or defaulted assets to reposition them and increase returns. Asset management provides a balance to our business model and provides opportunities to grow in an environment where investor interest in core or core plus investments is limited. In this setting, our pan-European reach coupled with strong on the ground local market competence is something investors and partners value highly. Moving on to page nine, We see here the continued new to transaction volumes, timing effects and revaluations led to slight decrease of top line compared to last year. However, our cost reductions initiatives are shown in the results. And by taking one of costs in the business area amounted to 3 million, we show an EBIT increase despite lower revenues. The merger of our fund platforms with further harmonized operations and increase efficiencies going forward. Besides the continued strong focus on efficiency improvements, we continue our efforts of retaining and growing our assets under management to be well positioned for profitable growth when looking ahead. So that was investment management. If we now turn to page 11 for an overview of principal investments. Our principal investment portfolio continues to comprise of eight active investment projects at quarter end. plus a few smaller seed investments and equity co-investments in larger aggregation mandates. As mentioned, the closing of Polaxis is expected to take place in late November, and we also expect an additional milestone payment in Met's Eurolog. Both events will further strengthen our liquidity, which has been a key priority for Catella to manage during this part of the cycle. We remain committed to our projects, And based on our financial position, we have the opportunity to be patient, to protect value and generate shareholder returns. In parallel, we continue to review smaller investment opportunities as they emerge with the ambition to generate returns on equity and gain new revenues in asset management mandates. So let's focus on corporate finance on page 13. The overall transaction market decreased slightly compared to the second quarter, with Catala transacted volumes within our continental platform decreased sharply, mainly due to a slow market in France, whereas the transacted volumes in Nordics decreased steadily. From a financial perspective, a stable quarter with net revenues and EBIT in line with the same quarter 2023, and to reiterate what we previously communicated, Our corporate finance division holds a strong market position in the fine markets where we have operations. And with a couple of new recruitments and increased cost efficiencies, the business area is in a better position to return to a highly profitable business as the market returns. Furthermore, the pipeline that has been built promises a revenue increase as transactions start to close. So I'll now hand over to Michel, who will share a brief financial summary beginning on page 15.

Thank you, Daniel. And good morning, everyone. And as you're well aware of, and as usual, the CEO steals the majority of my show. And to start by repeating what has already been mentioned, lower revenues have been more than offset by a lower cost base. One-off restructuring cost amounted 13 million in the quarter and the current full year estimate is expected to be around 20. Worth to reiterate is that our work to adapt the organization to a market with lower activity continues to be reflected in our numbers and we still expect more to come. Looking below the EBIT line, the negative net financial increased, but this was mainly due to the buyback of the March 17 bond and interest costs on the junior financing of Cactus, which was repaid in late September. Additionally, average interest on the market debt increased compared to the first nine months, as an effect of increased market interest rates, simply. And as the Swedish krona strengthened in the quarter, we also had FX headwinds in the period amounting to 11 million. Altogether, this led to a net loss of 23 million, but when adjusting for one-offs and FX effects, it takes us to a slightly positive net profit for the quarter. which is an improvement year over year. If we then continue to page 16 and look at our balance sheet and financial position, our balance sheet liquidity has remained strong and remained strong in this quarter, enabling patience and continued investments in our current pipeline. And as already mentioned, we issued a green bond of 600 million with strong investor demand and 10 to 308 million of the March 25 bond in parallel. And with the forthcoming divestments that will further strengthen our liquidity, we will also review the remainder of the outstanding bond maturing in March 25 during the next couple of months. As usual, I'd like to spend some time on describing how you should view our balance sheet. The overall majority of our liabilities are related to development projects and principal investments. These projects are in turn valued at cost. So hypothetically, if our projects were to be divested today, At cost, our net debt would be negative after adding cash. In other words, we would hold more cash than our financial obligations. Even though the projects are valued at cost, we continuously review their values on our balance sheet to determine if there is a need for an impairment. And the values we have on each and each individual project are confirmed to be above cost. Since development projects are treated differently depending on Catela's ownership, we have provided the slide you have in front of you to help you in your understanding. Before I move on to the next slide, at the end of the quarter, we had an equity ratio of 34%. and our cash position was 870 million, down from 951 million in the last quarter, but this is mainly an effect of the Cactus Junior Financing repayment. So in summary, we continue to have balance sheet strengths and sound available liquidity going forward. If we then move on to the next slide, number 17, We shared this slide during our investor presentation for the bond issue. And since it was well received, we have updated it and will include it in our quarterly presentations going forward. The slide you see in front of you summarizes how we look at our net debt, or in our case, net cash position. If we start from the left and move to the right, summarizing all our investments valued and costs that amounts to approximately 3 billion. If we then add the current cash position of nearly 900 million, we reach a total of nearly 4 billion. If we then deduct our market debt and the financing of our projects and also make slight adjustments to the cash position, With working capital needs and bonus accruals, this takes us to a cash position of $715 million. And once again, and as I summarized also on the previous page, if all the investments were divested at cost, it would lead to a negative net debt, i.e. excess liquidity after the debt being repaid. Once again, this is a hypothetical scenario, but in this scenario, we would still have investment management and corporate finance as revenue generating businesses going forward. And to state the obvious, it's not our ambition to divest our projects, and we would continue to invest in our existing pipeline, and also continue to review new projects that meet the business area's long-term return requirements of 15 to 20% IRRs. And with that said, I'll hand back over to you, Daniel.

Thank you, Michel. So before we conclude and open up for Q&A, I'd like to summarize briefly the quarter from our perspective on slide 19. And as mentioned, the market environment was still in a waiting mode during Q3. We are starting to see some positive signs, and our house view is that the market will slowly start to recover from this point. This is supported by the current dialogues we have across Europe, the fact that the swap rates and that the capital costs are coming down, and we also see that the rental levels are increasing. But as the famous quote from the Nobel Prize-winning quantum physicist Niels Bohr says, it is difficult to make predictions, especially about the future. And this, of course, applies also to our market as well. So with that being said, the predictions about the future being difficult, all else being equal, the current fundamental support, at least a slow recovery from the muted environment we see now, we have seen over the last two years. So if or if not this materializes, Catala is still in a better position today with a higher efficiency, lower costs, and a continued strong financial position so our key takeaways from this quarter is that we continue to do the right things and we are making progress we have preserved liquidity and we continue to have a strong cash capital position we have made cost reductions and continue that will have a positive effect and we see we show an ebit increase excluding one of costs despite somewhat lower revenues And also the merger of our fund platforms will further harmonize our operations and increase efficiencies going forward. And we expect the closing of some of our planned projects, which will further strengthen our liquidity, which is a key priority for us during this part of the cycle. And also finally, the AUM in funds remains stable, which has been quite an achievement in today's market. And we continue at the same time to see a gain traction in the new asset management mandates. So all in all, we are satisfied and see that we are well positioned to reap the benefits of going into hopefully a more active and interesting cycle of this market. So with that, we would like to thank you all for listening and we now 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 6 on your telephone keypad. The next question comes from Emil Johnson from DNB Markets. Please go ahead.

Thank you. Good morning, and thanks for taking my questions. And Daniel, congratulations on your new position. Thank you. I'd like to start by asking on the fixed fees, over the past five quarters or so they've been around 14 bits as a percentage of AUM, whereas before they've sometimes been around 15 or 16 bits. Should we expect fixed fees to sort of remain around this level as a percentage of AUM over the foreseeable future, or is there something that we should expect to drive fixed fees up or down?

Well, as there's been a transition from more fund-based fixed fees to asset management-based fixed fees, you should expect it to be around the current levels and the current market. But, of course, with the asset management mandate that we have entered, it also comes with a significant upside when we divest, when we increase the value of the assets. And long-term, of course, when investments into core funds start to increase and revaluations, which may have bottomed up now, start to increase, then you should expect us going back to the levels which you have seen historically.

Going back to historical levels in terms of fixed fees?

Yeah. I mean, the bips that you mentioned.

Okay. All right. And in your CEO comments in the report, you You state that you're optimistic that corporate finance volumes will pick up in Q4. Does that mean that you're confident that they'll do that or that you hope they'll do that? Could you offer any color on that?

This is very cyclical business and seasonality effect. And we see the largest volumes in Q4 over the year. And so that's typically what happens. So Q4 will, by historical evidence, be a stronger quarter. Then if it's going to be stronger than the last year or not, we don't know. But we see signs that the market is picking up. So, yeah, that's our prediction.

All right. And you also talked quite a bit about seeing a brighter transaction market in corporate finance. Is it safe to say that that sort of improved sentiment is also translating into the discussions with potential buyers of Cactus or are those sort of independent markets, so to speak?

No, of course, it's related, of course. A better market with more capital in the market will, of course, increase the probability to also close that transaction. But you should, of course, state again that we are not in a hurry regarding the cactus. We are in a good position with a good product and we have a good position. So it's important for us to await the right buyer at the right price. And hopefully that will occur during next year.

All right, that makes sense. And you also state that you are continuing with active dialogues with potential buyers of CAPTUS. Does that mean that during the quarter you've sort of moved further ahead in discussions with the same counterparties as before? Or should we rather interpret it as you're presenting or reaching out to new counterparties?

I would not like to comment really on the details. What we can say is that we are having continuous dialogues, and we will present to the market when we have something to say on that. But as we said, we won't own these assets for the eternity, and the objective is to divest it at a good timing. So let's stay with that.

All right, fair enough. And just a final question. previously carried out quite a few different cost efficiency measures and staff costs and so on. Do you foresee doing anything additional of this sort in the near future?

Yeah, I mean, we continuously review where we can reduce costs. And as we've previously done, I mean, we haven't communicated on external redundancy program or you know, cost cuttings for 2024. But it's an ongoing process. And as we mentioned in today's report, as well as in previous report, I mean, you see those being reflected in our numbers as well. And going ahead, I mean, the work is not stopped. And as I mentioned previously earlier, is that we expect more to come.

um let's say you know it's um i won't give you a number to pencil in going forward okay um but can you give any any color on whether we should expect to see anything more you know near term as a next quarter or is this more of a you know

That's going into... I mean, of course, you will see some things into the last quarter, but then also moving into 2025. But let's have in mind then, if our expectation and our predictions, which are hard to predict, play out and the market picks up in early 2025 or during 2025, then, of course, increased revenues will also increase our costs, which is a thing which we're happy with, of course, as long as it supports our long-term margins.

All right. That makes sense. Those are all the questions for me, but thank you very much.

Thank you, Emil.

The next question comes from Patrick Bertilius from ABG. Please go ahead.

Thank you and good morning. A few questions from my side. If we start with this expected divestment of Polaxis here in Q4, how certain are you that you will be able to close this transaction in the quarter? And can you talk about the expectations of IRR in relation to your IRR target of 20%, please?

Yeah, so let's start with the long-term ambition and IRR target of principal investments. That is 20% IRR over time. And as you saw, as we've had discussions for a couple of years, Back in 2022, we had IRRs of 65, 70% on our investments. Of course, in today's market, the IRRs are close to zero, to be honest. And that is also the expectation you should have on the sale of Polaxis. But it does finalize this project. We have a buyer. We expect it with certainty to close it by the end of the month. And it releases a lot of invested capital and releases liquidity.

So should we view the divestments in a way that it releases capital and it also helps you in the bond maturity for 2025? Is that a part of the underlying reason?

No, I wouldn't say so. I think this is a finalized project and, you know, divesting something in a different market with different assumptions than we had when we started the projects at a marginal profit is a strength. in this market. And then bond refinancing, I think that's a separate issue.

And you don't see a potential with a falling interest rate environment that this project could potentially be valued higher in a year forward compared to divesting it now where it would be close to an IRR of zero, using your words.

I'll go back to what Daniel said, quoting Niels Bohr. It's hard to make predictions, especially about the future. I think at this point in time, we're happy with releasing this investment at book values. and releasing the liquidity. And in this market, of course, there is a lot of opportunities to redeploy capital into higher yielding investments going forward.

I see. Thank you. And then turning over to transaction activity, we have seen that rates have come down. and despite that the transaction market hasn't really accelerated, what do you believe will be the trigger to really start this transaction activity again? And can you also talk about the expected impact impact on variable and performance fees given that you expect a gradual increase of the transaction activity from here into 2025.

But this is a gradual improvement as you see in the market especially here as I mentioned in the Nordics and we have seen now that credit margins are decreasing, we see that the bond market has opened up and so making It's more of a liquid market. And also, one other evidence that we've seen is that the yields have flattened out or even started to decrease again in the most sought-for segments, such as prime logistics and residential. So that is the evidence we see, and it's going to be a gradual improvement, as always in these turns in the market. And of course, when buyers and sellers are having easier to meet, it will also translate into transaction related fees for us, both within corporate finance and also, of course, we are being able to make transactions with our investment management business. Exactly how much? It's extremely difficult to predict, but it's gradually going to improve. And as we mentioned, we have strong positions in all markets. We are If not market leading, we have strong positions where we will be able to take the benefit of the market upturn going forward.

I see. And sticking to investment management, Germany is your largest region, but that is also geographically a market which is having some tough times. Can you talk about your expectations of any impact to Catella from this or is this not, it's two separate areas in your view or? Can you elaborate a little bit on that, please?

That market will also continue to improve, of course. Cycle-wise, I think Nordics are a little bit ahead. The market will start coming back earlier here, and it will gradually move southwards, so to speak. Of course, when the market also gets better in Germany, that will also affect our German business in terms of being able to make transactions and so forth in investment management. But it's impossible to put a figure on it, of course, since it's very theoretical at this point.

I see. Thank you. And then your background is in corporate finance. And we have seen that the segment has delivered negative operating profit contribution now for three quarters in a row. unfortunately. Is this long-term sustainable or isn't it an opportunity to make more adjustments to that segment in order to turn around profitability a little bit better? Or how do you view this?

We have done some right-sizing, of course, and the most important is to have the right people on board when the market turns. And of course, over a cycle of this business area should have high margins or higher margins than average, of course, because that is how the business model works, since we are working on a success basis. So the most important thing is now going forward, going into 2025, is to have the right teams in place, which we think we have. We have done some new recruitments and we have a strong position in all our markets. So we are optimistic about the coming year or so, going into the next phase of the cycle.

Sounds good. And as my last question, you're currently the interim CEO. How do you view being CEO as a permanent position?

Well, I mean, it's not for me to decide about that. But I mean, it's the board that manages and processes the recruiting of the new CEO. And I have, of course, no influence in that. So if I would be asked to, if I personally would be interested, I would, of course, consider it carefully. So let's see what the future brings.

Sound slight optimism there. Perfect. Thank you so much.

Thank you. Thank you, Bobby.

The next question comes from Martin Wallstrom from Red Eye. Please go ahead.

Good morning, and thank you for taking my questions. Good morning, Martin. To start, in the CEO comments, you write that the majority of capital inflows were generated in asset management through the growth of new mandates. However, when looking at the absolute levels, it seems there was a decline against Q2 and a slight increase in property funds. Could you elaborate a bit on this dynamic? Is this a result of larger outflows as well in asset management or is it revaluations impacting?

Yeah, sure. So at the same time as we had larger inflows in asset management mandates, we had some asset management mandates that ended. But altogether, that balanced out. And as we discussed earlier, I mean, looking at quarter over quarter, as well as over the last 12 months, you see that the inflows basically have balanced the outflows in AOM. And then you see the revaluation effects as well as FX effects. And that's the main decrease in the delta in the AOM quarter over quarter and year over year.

Great. Thank you. And in terms of the one-off costs of 13 million, could you elaborate a bit on this, what this was related to?

It's basically severance cost and cost adjustments across the organization.

And so the severance costs, are those related to the CEO departure or to all employees?

Part of it is related to the CEO departure and other parts are across the organization, both in investment management and corporate finance. I see.

And just a clarification here, in conjunction with Kristoffer leaving the company in September, head of communications in my interview uh that this was a component and get out of ongoing transformation uh and if you could please just specify what should be my uh transformation in this case uh to us it seems like the large transformation was carried out with the divestment of the banking components and so on no i mean uh the board and christopher they mutually agreed that he would step down from his role and

And also the board expressed his satisfaction with his work and commitments that he's done over the leading transformation of Catalla over the last years. So that is what we communicated around that.

And my final question related to Cactus. There was a footnote in the investment or in the principal investment part of the report. where the last part of the construction is expected to be finished in 2025. Could you provide some color in this? I guess you have said previously that perhaps the project doesn't need to be fully completed before being divested, but kind of how should we think about the timing of the divestment here?

No, I think what you should focus on is what we communicated in the last quarter, is that all leases have been signed, which then leads to a future NOI, which a potential buyer can take into account. And of course, constructions will continue through 2025, but that's less relevant for a potential buyer as you calculate the value of the asset based on the NOI, basically.

All right. Thank you. That was all for me.

Thank you.

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

um some um written questions um six questions coming from kim um came a long time uh no c and uh just wanted to say whenever you want to you're welcome to the office for a new lunch i think it was two years ago um but the first question is um when is the catella logistic fund plus plan to launch and when do you estimate the fund to reach its target volume of 500 million? And how large is the committed capital now? So to start with, we have received all the licenses. All the licenses are in place for this fund, and we are building up capital commitments. The number is nothing we have shared. But it is, of course, in this market, it is a positive sign that we attract interest into this fund. And as Daniel started with, through this downturn over the last two years, logistics have held up pretty well, both when it comes to demand as well as yields. The next question is, Ketela European Residential opened to new investors for the first time in years during Q3. Can we expect to see larger subscriptions than the 10 million that occurred during the quarter? And why does the fund choose to open up now while the fund still has 285 million in cash? and are well above the 5% cash to NAV compliance rule. I think by simply answering the last part of the question, I answered the first one as well. So we see interest from investors to invest in this fund, and that's why we've opened it up again, basically. And so besides the 285 million euros in cash, we see additional commitments going in and new potential investments into this fund. What are your near-term priorities regarding capital allocation up until capital needs to be deployed into the larger projects that are planned to be finalized in 2026 and 2027. Salisbury, Mander Centre and Canixalía. Well, as we started with, we have managed our liquidity and capital position prudently through this downturn in the industry. And the projects that we have and can continue to invest in, we've had the opportunity to hold on to these and continue our commitments and continue our investments. And I mean, in the longer run, it will, of course, generate the IRRs that we are seeking as well as shareholder returns, which you're, of course, interested in. um then how much of the 90 million cost savings are related to fixed cost well the majority is related to fixed cost as you see when you look at our full-time entry numbers there's been a significant decrease in this and then yeah so the majority is related to to fixed costs And what are your estimates on the profits of selling Plexus? I think we already answered that one. Where are you in the process of phase one in C-STAT? Are there any plans when phase one will be divested? Are there any active discussions about regarding a sale?

No, I mean, we are... looking at the project, of course, and we will review that during the next half year going into 2025. So there are no active dialogues going on right now.

Good. I hope that answers your questions, Kim. And, you know, as always, happy to take a call or if you want to follow up by email. Then we have one last question from the web from Christopher Milsom. Could you elaborate on what you mean by cash adjustments amounting to 261 million on slide 17? Why are you adjusting the cash positions? Well, once again, it's to be prudent. We have 20 plus subsidiaries across Europe. They, of course, need some working capital. We also make bonus accruals. So that's the reason behind the adjustment. And no further questions from the web.

So with that, we'd like to thank you all for listening and look forward to speaking with you soon again. Thank you.