Hello, and welcome back to the seminar. My name is Carl Korsheden, and I work as an Equity Analyst here at DNB Carnegie. I am going to moderate this session. With me today, I have the CEO of Idun Industrier, Henrik Mella, who will present Idun in roughly 15 minutes, after which we will follow by a Q&A session. You here in the audience, and for those of you joining online, have the possibility to ask questions. For you here in the audience, feel free to raise your hand should you have any questions. I have a microphone here, I will distribute them. With that said, please go ahead, Henrik. Thank you. I am glad to be here, and let us talk about Idun Industrier. We are an industrial group of companies. We consist of 22 independent companies that we consider being some of the finest small companies in Sweden. We divide them into two groups, one manufacturing, which is slightly more than 60% of sales and profit, and service and maintenance, which is a bit less than 40% of sales and profit. It should be said, though, that we manage and view these 22 companies independently and work actively with each and every one of them. Idun is primarily a Nordic group, so more than 90% of sales is generated in the Nordics and roughly three quarters in Sweden. As this is a summary slide, if you should remember one thing about our investment criteria, because as you know, we are also a compounder continuously investing in new companies. We look for companies with a high market share in a specific niche. It is a lot of manufacturing, industrial trading, industrial services companies. In terms of our business model, how we manage and view these companies, if you should remember one thing, it is the pilot school approach, meaning that we really believe in the managers being owners in their own companies. I will try to summarize some of the most important things about Idun. One is that we only look to invest in companies that we can really understand, where we feel that we can add value in the Board of Directors, where we work actively. For Idun, this means companies in manufacturing, industrial trading, industrial services. We do not look for consumer goods companies, no biotech, no medical services. These are the areas that we look at. As an investor, we are a classic value investor. We only look for companies that have solid and healthy profits, strong cash flows, good margins, and companies that have had so for a long period of time. We often look back at how did the company perform during the last recession or the recession before that. There should be a history, a track record of good profits. For Idun, this means that on average, our gross margin is around 60% and the EBITDA margin roughly 14%. I mentioned the pilot school, and this is something that really distinguishes Idun. I will talk about this in three ways. The first is what we are looking for. We prefer, if we can choose to invest some 75%, 80%, 85% of the shares in a new company, so not 100%, leaving a quite big minority. This, of course, goes hand in hand with the fact that we only look for strong, profitable companies. If you have been creating or in the second, third generation, taking over and managing this very profitable company for a couple of decades, it means that you have some really valuable experience. If you, in addition, keep your 20% minority and you continue as Managing Director of the company, or at least on the Board of Directors of that company, we maintain your involvement, engagement, and not the least also cost awareness, because then we are in the same boat together. The second thing to mention about the pilot school is that we always offer management, even if they are an external recruited MD in the future, management, MDs and key people in these 22 group companies, we offer them ownership. In total, we have more than 100 MDs, production managers, sales directors, financial directors, and other key employees that own 0.5%, 1%, 2% of the respective company. Many of them have also bought Idun shares, but we talk about ownership in the specific company. That's the second thing to mention. I should say that this means, of course, in the springtime, we have a lot of shareholder meetings because this is real money. Some person in Småland borrowing half a million krona on a mortgage loan to buy shares in his company. It's for real, and we need to take it seriously, but we really believe in the extra involvement this brings. Lastly, about pilot school. We live as we speak. Everyone at the mother company have invested the absolute majority of our own private capital in Idun shares. This go for me, it goes for Oskar, our CFO, who's sitting over here, and all in the management group. We are not talking about stock options or those kind of programs, but normal shares that you as external investors can buy on the stock exchange. Finally, where we maybe stick out is that we rarely do deals through brokers. It happens, yes, but some 80%, if we look at the investments we've made over time, we contact the owners directly, and then over time cultivate the relationship, and after a couple of years, most frequently, we manage to reach an agreement, and we invest in their companies. Then we do all the due diligence ourselves, so we don't buy these kind of services. We look at the agreements. We look at the financial figures. We interview management. We talk to customers. We walk in the factories. We've done this before, and we don't want to have someone else doing it and read their reports. We prefer to do it ourselves. Yes, this takes time, but we believe it gives us really good knowledge about the company, and that's a kickstart for the board work afterwards. Also, we don't make so many investments. We have the time to do it. On average, we make two to four investments per year. This could be new group companies or add-on acquisitions. This is exactly the pace we've been holding since the start, and we don't intend to increase it. Our objective is not to make as many investments as possible. This pace is good. It's consistent with our financial target, which is to grow EBITDA 15% per year. We can do it with this pace and with the people we have at the mother company because we want to keep the mother company really lean and not grow it too much. Totally in the group, we are slightly more than 1,000 employees, and currently, we have eight people in the mother company. Finally, some comments on the first half of this year. Profit has grown 11%. The operating organic profit development, unfortunately, has actually been negative, -3.6%. It is towards the end, hopefully, of this tough market situation. We think we will get out of it, but that is where we come from. However, good cash flows and profit per share has continued to increase as it has for many years. During the first six months, it has been an active year when it comes to acquisitions for us. We have bought three new group companies. It is Mouldex Sweden first with services and spare parts for the sawmill industry and are particularly strong for planing machines, where they are leading in Sweden. Then we have AGB Services, and they make service on and calibrate press tools for plumbers. These press tools, where you press tubes together, to avoid leakage, actually you have to send them in for calibration with some regularity, and they are absolute leading in Sweden for all the big tool manufacturers to do this service and calibration. Finally, Nordbergs Tekniska, which is a company here not far from Stockholm, and it is a leading company in really special technical polymers, so plastic materials, but not standard ones, but rather that can withstand high temperature chemicals that can conduce electricity and and so on. Operational development, we have a strong start for some companies, like Wiberger and Fredahl Rydéns. Others like Sjöbergs, Stegaföretagen have had a more challenging start of the year. Otherwise to be mentioned, first six months, end of June, we made an early redemption of our last outstanding bond of SEK 220 million, and we exchanged it for bank debt, and starting as of July, this should bring down our interest expenses with another almost SEK 8 million on an annual basis. With this and the other measures mentioned here that the cash pool now is complete, we take over some currency exchange for. We have some importing, some exporting factories. There is no need to leave money on the table for the banks. We feel that in terms of making our balance sheet more efficient, we are getting close to being complete. In terms of market conditions, we see that hopefully now after the summer and the fall, that we do see that it is gradually improving, and we look to the future with some confidence. I think I will stop there. Yeah. Perfect. Plenty of time for questions then. Again, if you have any questions here in the room, please let me know, and I will bring out a microphone. We have one here already. Hello. What is the main reason to sell a company to you, and what do you add to a bought company primarily? I should say that we add a couple of things. The first and basic one is, of course, that the company will remain as an independent entity. We have never closed a company. We are not moving companies. We are not merging them. We only invest in companies that standalone are strong enough so that we can build on them and continue to grow. That's the first thing to mention. We're not buying and selling companies. The other, in terms of what we actually can add, I would say, structure. Even if we only invest in well-run profitable companies, typically they don't have a clear objective of where they want to be in three or five years time and a strategy to go there, and annual business plan. Not to become bureaucratic, but just to have a discussion about this together with management. You always come across good ways to clarify that these are the priorities. We should go for that market and not this one, these customers and not those. It's often a very healthy discussion. Not seldom, it's the case that when we buy a company or 80% of a company, the most frequent situation is that you have two or three persons, one person, husband and wife, brothers, or they have almost all their money locked in that company. Even if they knew that we should establish ourselves in Norway, or we should hire two more salespeople to do this, they've been hesitant to do so because they didn't want to risk anything. When you sell this 80% and you talk about these ideas, then you actually realize that you should go for it. We should invest in that machine, hire that person. That's why we see that on average, the operational development in the companies improve after we get in. They don't go down. I would say these would be the main things that we could add. Perfect. Another question over here. How would you define the difference between an add-on acquisition and a regular acquisition, and how would that affect your strategy going forward? Well, the distinction is quite clear. An add-on acquisition, it could be big or small, but it is when it is added to an existing group company in the sense that we do not create a new Board of Directors with Idun representatives. If a current group company, we are two people from Idun in each of these 22 group companies on the Board of Directors, and if we make an add-on acquisition, that new company will become a subsidiary of one of the 22. Whereas if we buy a new company, we establish a new Board of Directors. That would be one way of saying the difference. Another is, of course, normally size, because an add-on acquisition could be relatively small with only a few employees, or if it fits very well together business-wise. But a company could be too small for us to add as a new platform. So that it is size and it is this principle of new board or not. That would be the distinction. Perfect. Okay, maybe you can hold on to the microphone for now, and then I will shoot some questions. I guess if we turn a little bit to the more near-term outlook, I think you said both in the Q2 report and also hinted a little bit about it here, that you are cautiously optimistic for the second half. I think you sort of guided that you expect margins for the full year to be higher than the previous one. What sort of leading indications do you look at to get confidence in that numbers? What type of visibility do you have when it comes to, say, order backlog and so on to get confidence in that second half is going to improve relative to the first one? Yeah. On the order backlog first, it is actually the case that we only for about 50% of our companies it is meaningful to track order backlog because some of them, there is no time almost between placing order and selling. We do not have full or long visibility, but on average, where we do have the visibility, it is pointing slightly in the right direction. What makes us believe that the second half will be probably quite good is that one is, of course, what the group companies are saying. We talk to them all the time, and we ask about forecast and what they think and believe. The other thing is, of course, I mentioned three companies that we invested in during the first half of the year, and also then we have Trikåby in the end of last year. All these four companies have EBITDA margins that are slightly higher than the average of the group before them. There is no indication that their EBITDA margin will go down. Mathematically also, it should improve the second half of the year. Yeah. That is comforting. If I am continuing a little bit on cash flows and financing, you have obviously done quite a lot here over the last one, two years in terms of streamlining the financing, moving financing from the subsidiaries up to the mother company. You have redeemed some of your bonds to exchange that with ordinary bank debt, and so on. I think you have done quite a lot on, say, the financing side. Also you have been implementing this cash pool throughout the organization and so on. It seems you have done quite a lot in terms of improving that cash flow generation from the financing point of view. If we look a little bit ahead, what do you think will be the key levers to pull in terms of increasing that cash conversion and cash flow generation further? Is it now more of active work with working capital and so on, or are there any other low-hanging fruits that you can pull in the short to midterm? No, I wouldn't say that there are any low-hanging fruits in terms of financial engineering, if you will. This is operational work with the companies to be disciplined when it comes to the CapEx process, of course, make investments, but not too much, and operating capital, as you say, as well. However, again, we are tracking. We don't want the inventories to grow too much, obviously, so you need to have discipline there as well. But we are not the kind of companies that will be aggressively pursuing to try to minimize inventory and we don't believe in that. It should be a healthy level, controlled points of filling up the inventory so that it doesn't grow too much, of course. But we don't want the companies to be anorectic to maximize quarterly cash flow. That should not happen either. Yeah. That's clear, and I guess sort of a follow-up on that, and obviously, you have 22 different companies. All of them are in some ways in their own way, so to speak, with their own business models and so on. Do you have any, I guess, group-wide KPIs that you are tracking more closely than something else that you are evaluating your individual MDs on? Are there any incentives related to those KPIs? First to say, we have some cases where we have MDs having classical bonuses and often linked to profit or EBITDA, but not in so many cases because we prefer them to be own stock instead, shares. Because with shares you get the right long-term incentive, and then they have exactly the same incentive as we do, not to maximize the profit in a specific year. If to say one thing that we want the companies to focus on, it's actually year-on-year EBITDA growth. We have discussed should we focus, because we talk a lot about cash flow. Cash flow is important, and we track it, but we have come to the conclusion that because many of our companies, 30, 40, 50 employees, it would become too financial, and it's not their language to talk too much with these MDs about cash flow. It is rather the EBITDA growth, then we have in place routines so that the working capital and CapEx does not grow too much. That I would say. To your question about what KPIs we track, of course, the full P&L, obviously, order intake for the ones where it is relevant. Otherwise, as you also hint that it differs from company to company. I would say, if anything, you could divide our companies into three types. One, you have this all are business to business, but one is the manufacturing companies, another is the trading companies, and the third would be the service companies. If you look at the KPIs, you could say the service companies, it is a lot about making sure that the service technicians, the percentage of their time that you can actually get paid for by the customer. That would be KPIs relevant to that. For the trading companies, of course, it is the working capital and the churn of the inventory and so on. For the manufacturing companies, you have KPIs related to the efficiency of the use of the machinery. The KPIs tend to differ depending on which type of company it is. But we do not want to have too many KPIs, and they should be quite unique and specific, and it should be KPIs that the management in the respective company want and that they would use to steer their own company. We do not want to push down their throats KPIs that they do not wish to follow. Yeah, super. As you mentioned, you predominantly then do acquisition into, say, these three verticals, industrial trade, manufacturing, and industrial services. But if we look at it in a different way, say, from an end market point of view or growth teams and similar, are there any sort of area or industry or end market vertical where you are particularly interested in finding new companies in? Well, I would say we do look now maybe more actively than three, four years ago at add-on acquisitions. Let us say when we had 10, 15 companies, we wanted to have more platforms, and we still do want to have more group companies, but now we have also a good amount of healthy, profitable group companies where we have the MD and management in place, and that are willing and able to look for new companies. Here, of course, it makes sense, because then we can generate more leads, and once we have made one add-on acquisition, it will be much easier to make the second one, because it is often a journey when you make a first add-on acquisition with a group company. We are very involved from Idun, you walk hand in hand with the lawyers and negotiations and so on. Already the second add-on, you see a difference. If anything, that would be one area where we could see that we could get some help to keep it going. Yeah, that's clear. In terms of M&A, I guess from a geographical point of view, as you pointed out earlier, you've been predominantly Sweden, and then, yeah, starting to do a little bit of add-ons in the other Nordic countries as well. If you would look three to five years ahead, how would you think that geographical distribution would look like in terms of incremental M&A deals, say, from now and five years ahead? Yeah, I think five years is a good time, actually. One year, you never know, or even two years. But in five years' time, I would say we probably have made a few new group company acquisitions in other Nordic countries, and probably also one or a few outside the Nordics. Yeah, I think in five years, most probably we have moved outside the Nordics. Yes. Perfect. I guess a little bit of a follow-up on that, what is the reason for that strive to look outside of Sweden? Are you seeing that multiples are coming up here, or that the pool is narrowing a bit here, or what would be the strategic rationale for entering new geographic markets? Well, it is a combination of the two, I guess. I think all people here know that there are quite a few companies that are similar to us, other compounders in Sweden, and Sweden is a great country for producing new and profitable companies. Having said that, if you would like to continue to grow, as we do with these two to four acquisitions per year for many years to come, in the end, you would come to a point where you need to make a decision of either to go outside and look for other companies in other industries, let us say consumer goods, so that kind of, or you would need to change, or not change, but not follow your investment criteria exactly. Maybe not so high market share or not so strong profitability, and we do not want to do that. We do not want to overpay either. Then the conclusion is, of course, if we want to keep to our investment criteria, really good companies, reasonable multiples, it would make sense to look in nearby geographies. I should add, of course, it should not be underestimated either. It is a big step, and it comes with a cost also to manage, in a tight and professional manner, companies in other countries. So that should always be compared to make another acquisition in Sweden, because we are very risk aware at Idun. Yeah. I guess I will follow up on that as well. Do you expect your sort of, call it, go-to-market M&A strategy to differ somehow when you enter other geographic regions, or are you still expecting that, I think you said 80% bilateral deals throughout your history. Is that also expected to be the strategy entering new geographic markets, or will you more rely on external brokers and so on, and do you think you will get the same sort of results if you would change that somehow or calibrate that? Yeah, that's a good question. Look, most probably as we leave Sweden and Swedish-speaking countries, to be realistic, it will be a higher percentage of brokered deal. That would probably be the case. We need to find another model that still works for us at Idun. But, yes, to believe that we will contact owners directly in other countries, not in the same way, no. Probably there will be some contacts, but not in the same way as in Sweden. Yeah. That's clear. Maybe I have time to squeeze in a final question. Not sure how much you can say on the topic, but when will you start reporting with IFRS, and when will you change to Nasdaq Main Market? It's a matter of time. We will go to the Main Market. I think if you look at the, we are becoming too big to be where we are, and we know that, and it's a matter of time. But I cannot give an exact date for that, but it will happen in the future. Yes. Thank you very much. And thank you for listening in.