Röko AB (publ)

Welcome and good morning. So we start by going into slide number two in our Q2 presentation. We look at two important metrics for compounders or serial acquirers when we assess our business. They are growth in EBITDA and change in leverage that we compare on a year-to-date basis versus the same period last year. We grew EBITDA 11% in the first six months of this year, driven by acquisitions and organic growth, but with negative exchange rate differences. Leverage was unchanged at 2.3 times EBITDA. In the 12 months period since the end of Q2 2024, we have invested approximately 926 million Swedish kronor in acquisitions, of which 600 towards the end of Q2 2025. So the unchanged leverage is due to strong cash flow generation and organic profits. If we move on to page number three, we have the highlights of our group's financial performance with the prior three years providing full year context. In the year-to-date period, we grew sales 6% with 3% organic growth in local currency, Exchange rate differences had a negative impact in the period with minus three percentage points. EBITDA grew 11%, as previously mentioned, driven by acquisitions and organic growth. But as previously said, note that the exchange rate differences were negative and impact both net sales and EBITDA. Our margins are seasonally stronger in the first half year, which you can see here at 22%, whereas full year 2024 at 20. But we still see a margin improvement here in the beginning of the year versus the same period last year. This is predominantly driven by margin improvements in all comparable or in most comparable companies. But we also see that our recent acquisitions have provided a bit of and being margin accretive. As a reminder, we have approximately 7% of our net sales in the US, of which the majority are from goods that are manufactured outside of the US. 2% of that 7% are net sales that stem from goods manufactured in China. We monitor the situation closely, and while the tariffs certainly pose an issue to specific companies, the risk for our group is not so significant. In the second quarter, we acquired and consolidated a company in the Netherlands, a company called Topa Bathroom Products. The company designs and sells bathroom products such as faucets, mixers and bathroom furniture in the Benelux market under a brand called Brouwer. The company has more than 30 employees and approximately €20 million of net sales. We believe that the market for acquisitions is a bit better and more active the previous two years. If we then turn to page number four we go through cash flow and some return rates. Our free cash flow declined nine percent in the year-to-date period versus the same period last year and cash conversion was 67 percent. We completed the IPO in March 2025 and transaction costs that relate to the listing impacted free cash flow negatively with 41 million Swedish kronor in the six month period. So if we adjust for that, then cash flow declined 2% versus the same period last year and cash conversion was 73%. I think this year we have had a bit higher organic growth in local currency than the same period last year. And we can see that our companies tie a bit more working capital than the same period last year. We monitored the development of inventory and trade receivables closely together with our local management teams and always try to improve. Return on capital employed improved from 13.5% in H1 last year to 14.1%. Our return on capital employed remains relatively low compared to our peers as we are a younger company, but we see that it improves year over year, which is a good trend. The acquisition that we completed in the six month period was also completed in the last month, and that timing effect has an adverse impact on return on capital employed. Return on capital employed, if we exclude intangibles arising from acquisitions, With that, I will hand back to Ida, who will moderate the Q&A session if there are any questions.

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The next question comes from Dan Johansen from Seb. Please go ahead.

Good morning. A couple of questions from my side. Maybe starting on the B2B segment, quite nice margin uptick there, close to one and a half percentage points. Is it anything particular driving that or more positive consumer sentiment in general or is it specific companies or broad-based? Anything you can say about that? Thank you.

Thank you, Dan.

Sorry, I didn't catch if it was the B2B or the B2C segment in particular, but I'll talk a little bit about both.

We can do both.

So I think in B2B, most of the margin uptick actually comes from mix shift. call it margin improvement in the comparable companies as well. But most of the uptick is actually from Mix. In B2C, it's actually the opposite. So there we have a strong margin improvement in comparable companies. Mix has a slightly positive effect there as well, but not so much. more actually on improvement on a comparable basis. I think my sort of general comment on this is that we always work with our local management teams on margin improvement initiatives and margin focus. And I hope that that has started to take a bit more hold. I think that's the general comment.

thank you thank you for that color and maybe jumping into a little bit on M&A there you've done your first acquisition during the quarter I guess you were held back a little bit by the IPO process but you say you have a better pipeline this year it sounds like you will be a little bit more active now during H2 is that a correct observation although it's yeah I guess we'll see but anything you could say more on your M&A outlook here for the remaining months of the year thank you

I think it's always very difficult to provide some sort of outlook and we don't give any real guidance on this. Acquisitions is binary. You need to strike a deal between two parties and it's very difficult to know if it's going to transpire. But the only thing I can say is I think we have a team that works very hard on sourcing opportunities that we see. In general, my feeling is that the number of qualitative opportunities that we have seen so far in this year is a bit better than it has been in previous years. But we still need to get them over the finish line. So I try to be positive and optimistic on this, of course, but But it's difficult to give any clear guidance.

Yeah, fully understood. But it sounds like there's at least a lot to work with there. And maybe a little bit of working capital, a little bit build up during H1. Is it sort of a normal build up? You will release in H2 or anything to say there on the working capital here during the first half of the year?

I think in general our cash conversion is still at a relatively decent level if you think about it from a year-to-date perspective. Quarterly, it can move a little bit and swing, and we had a weaker Q1 than Q2. But year-to-date, I think it's still on a relatively good level at 73% if we adjust for the IPO-related costs. One thing that I think is important to bear in mind here is that we actually do have 3% organic growth in local currency. And we come from a period of time when the companies have released quite a lot of working capital. We work very closely on making sure that we don't tie too much in inventory or in trade receivables. But I'm not expecting a significant deviation from the current cash conversion level either positive or negative I would say.

Yeah thanks for that and I agree it's still a quite good cash version so far this year and maybe a final one from my side if I may and just on the EBITDA margin level of the business require top buys that yeah could give some flavor there if it's in a rounded line with group average or that deviate much from your other businesses, so to speak.

I think it's, I mean, as you can see in the note on acquisitions that we have, you see that they have very strong margins here in the beginning of the year. They do have accretive margins to the group, but they also do a very, very good first half year. I think that's important to mention.

Okay, good. Thanks. I think that was all from my side. So I wish you a good summer. Thank you so much.

Thank you, Don. Have a nice summer.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad.

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

So I think there have been a few questions in the chat, I think, but most of them I think we have covered from what I can see. I think there are some... There is maybe one question on... organic growth, be it if it's mainly driven by margin or if it's driven by volume or price. I think we have a very diversified group of businesses. It's difficult to comment too much on what is driving the organic growth in such a diversified group. But in general, I just want to say we always work with our can and do raise prices of the products so that we can protect and improve our margins throughout. That's the one thing I wanted to add on that point. Then I think all the other questions have been covered. So with that, I want to say thank you all for participating and listening. And yeah, I wish you a nice summer.