Good morning, everyone, and welcome to the Teqnion 2024 Q3 Q&A. I'm Daniel. This is my friend, Johan, and as usual, we will alternate between the questions that have been sent into our Q&A email and live questions coming in through the Teams chat. Good morning, friends of the media. Thank you for joining us for the 2024 Q3- Sorry, I think we have a little bit of disturbance there. Sorry for that. But before we jump into the actual Q&A, would you like to say something about the quarter? Yes. I can say a few words. Hello, good morning. We released the quarterly report this Saturday, so I guess you have had some time to read it through. As you see, we are losing some margins, and we're not happy for that. We have a few companies that are really performing well, having really strong margins, and we have quite a few companies right now that are actually losing money, which means that the overall margin is dragged down, of course. This is not in a place where we would like to be, obviously. We're working very closely with these companies in order to make them profitable again and take care of things. Overall, what we see, the industrial market in Sweden is fairly weak. It's a little bit better for us in the U.K., and yeah, we're fighting on, we're fighting hard, and we're trying to improve everywhere. Maybe that should be sufficient for now. Yeah. Let's get into the concrete actions and questions. So the first question we got in the email inbox is from Andreas from Germany. He basically asked two questions. One, would we consider investing in companies in Germany, Austria, Switzerland region? And also, would we consider using Bitcoin as an investment for our balance sheet? Quick, quick answer, hopefully, is that we're constantly looking for new acquisitions, but we're right now focusing on where we are, so it's mainly Sweden and the U.K. We're also looking in other countries in the Nordics. When we feel comfortable enough in the U.K., we will move into another geography, and we never say never to anything. Yeah. On the second question, it's a quick no. We think we understand that there's a lot of upside with Bitcoin, but we are not into that. We want stability and something that we truly feel that we trust ourselves. We got a question from Benjamin on the Team's chat. He's wondering, the order backlog went backwards in this quarter. Can you explain where it's coming from? I'm trying to think. I don't think I have a quick answer to that, actually. What we see is that, of course, we have big order backlogs when it comes to the housing companies. They are not having big order intakes right now, and there are some other very niche companies that have long order backlogs. Most of our really profitable companies do have rather short backlogs, and so the backlog is, yeah, it shows you a trend, but it's not crucial to what we will believe will be shown in the future. No. I think, I want to say, unfortunately, that's maybe not the right word, but going back three years, five years, I think the backlog correlated more with our actual revenue and profit, and then over time, for reasons, which basically is that we try to find great companies without focusing on if they have a long backlog or not. The backlog actually says a little bit less about our future profit than what it did before. Yeah, absolutely. Another question from Benjamin is, which companies are unprofitable, less profitable, besides the construction-related ones? Everything that supply heavy industry in Sweden are struggling at the moment because the big global industrial companies sell less and has less orders, which means that we're squeezed a bit there. Thinking again, yeah, it's also a little fluctuation. We always see a little bit of fluctuation in some of the defense industry because a lot of the big countries and don't have to be big countries. All of the Western countries are focusing, of course, on personnel and actually material when it comes to weapons and not so much training equipment and alignment equipment, where we are strong. Which means that there's a lot of projects that has to stand back because we have to focus on defending ourselves. Something else that I'm missing? Yeah. I, I think the big thing is, of course, that, the macro in Sweden have really made it clearer which companies that are underperforming. I mean, they, some of them were doing good or maybe even great financially, and due to that reason, we have not taken enough steps into making them even better companies or great companies. That is what we've seen, now and for a while. So, so the ones that are unprofitable are, as you said, the, the ones that have more customers within the industrial sector, but it's, it's less of an industrial thing. Yes, it, it doesn't help, but I mean, it's, it's- It's... No, sorry. You are so much better explaining this. But what happens, of course, when we actually have to... When the orders are not automatically in the fax, so to speak- Yeah. They're not in the inbox anymore, you actually have to go out and ask the customer for what they need, then, of course, we see that we should have done that much more during the good, good economic days. Yeah. We see that in a lot of industries where the demand in the industry is down maybe 10%, 20%, even 30%. And of course, some of our companies suffer from that. And also, to be very transparent, some of the companies, they blame that for the reason of not being profitable. And, I mean, that is, of course, part of the truth, but the other side of it is that if the market is down 20%, it means that 80% is still there, and we should, and we need to be good enough to capture that part. If the market is down 100%, I mean, that's different, and it's not. We got a question from Hai, from Oceanside Invest, who has two questions. One part is regarding the refined acquisition strategy, where it says, "The acquisitions we made over the last few years are companies that are less sensitive to economic fluctuations. Could you please share some of your thoughts on the common characteristics of the few acquisitions, and why we haven't done those earlier, and why we believe that they are more resilient on the housing market?" That's the first part. Well, I think we talked about this a few times before, and we can definitely talk about it again. When it comes to the cyclical companies, we have some contract manufacturing companies that are somewhat cyclical. We have the house builders, of course, very cyclical because the housing industry is like that. It's the blame is on me. Well, didn't I understand this? Yes, I did. Did I believe we could outmaneuver it? Yes, I did. Did I think we can do it in a flexible way, a little bit better than everyone else? Yes, I did, because that's how I view the world. I think we should be better than anyone else and always be on our toes and grasp every market opportunity that we see, even in bad times. It's too complex to live like that in every aspect of everything, which means that we try to focus on our core values, which is we pursue companies that are easy to understand, because we will always have to deal with people. Human beings are always involved, still, in all businesses, and human beings are complex, and we love each other, and we try to be our best here. We try to constantly improve what we do and how we interact with our companies and with our customers and suppliers and, but there's always a human being there that needs to be encouraged, that needs to be coached, that needs to be improved. And sometimes that is complex enough. We don't need a very complex manufacturing facility or a complex business model, or a very hard to understand products or softwares or whatever. So we try to keep the business simple, and we try to focus on become better as businessmen and businesswomen. Sorry for the long answer, but this is the core for what we do. We target a lot of potential acquisitions and talk to the people that are running them and try to figure out if the culture there is healthy enough for people to love what they're doing, trying to be good at what they're doing, and staying on for a very long time. Those are the companies we're looking for. I'm very... I might be somewhat naive in that, in the past, we could buy small housing companies because it's a lovely product. We shouldn't buy a company because we love the product. It's a stupid way of buying a company. I've done it, and now we have to pay the price for it. Lucky enough, we are no longer just one person here doing that work. Now we are more than two because we have Daniel, and we have a team around us that helps us and supports us. And Daniel is very, very much focused on finding these, let's call them simple business model companies with great people companies. It's a total different animal today than it was five years ago when Daniel wasn't here, and I'm extremely happy for that. Even if I sounds harsh, I'm very happy about it. Thank you. I think another facet of that question or the answer is that the common characteristics we look for companies that and the ones that we have acquired lately they have very or maybe even extreme high return on capital, and we like when it's robust over time. I mean, that's something that we do not compromise with. And then putting in the soft value, I mean, it's interesting that it has been like that for a while, but of course, will it continue? And that, I mean, if they have extreme high ROIC, and we believe that will continue, that's something we're interested in looking into, to make it super simple. Another question from Hai is regarding the ROIC free cash flow. He says that he places a huge amount of attention on, emphasis on free cash flow, and it's good that we also measure it similarly. However, when it comes to making M&A, do we use that metric to assess the investments and companies? I think we more or less answered that question. I think we did it just now, but of course, it should be so simple. The balance sheet should be so light, so most of the earnings should pop out as cash. Yeah. We talk a lot about earnings because it's rather simple. The concept is usually easier, and it's obviously due to accounting reasons, also a little bit more stable over time. But the companies that we look for, the earnings that come out from the income statement should be the cash flow over time. Maybe not all quarters, but- Yeah ... over time. All right, in the meeting chat, Errol is looking at the balance sheet and says that there is a significant increase in prepaid expenses since the beginning of full year 2023. Could you provide some insight to why this number has more than doubled? I think that it's... One part is, of course, that we have more companies. But I think the more significant part of the question is that it's, it has doubled, but it's quite a bit of a timing thing, and, I, if I remember it correctly, we're talking about SEK 10 million or so. We don't foresee that it's gonna move in that direction. It's gonna fluctuate. From Galileo Invest, in the inbox, we have a few questions, regarding... He has one regarding the CEO coaches or the HQ people. I'm making this a little bit shorter, but how are we working with the CEO coaches and the CEOs to ensure that we get the information that we need quick enough to make decisions? Oh, it's a long question. I see I can't read it because it's too far away. I'm smiling because you have so good eyes. Glasses. Yeah, but no, but we work very closely with the entire team. Yeah, we're nine people, and we talk every day, more or less. When it comes to the CEO coaching and how they've been working for many years, is that we walk through everything together, and of course, they are schooled into the technical way of doing things, which has been. We have a lot of patience, and we work really closely with those that we consider needs close coaching. Maybe we've been, and I think I wrote something about it in the CEO letter. We've been working rather soft in supporting them, and it's easy to do when everything is going okay. Also mentioned in the letter, right now, we're working a little bit differently because we see that we have been, let's call it, too soft. But it doesn't mean that we're harder or harsher or anything like that, but now we're following up more on specific numbers, specific actions, and coming with more concrete examples of what we believe is necessary to execute on in order to get things on track again. So it's a little bit different now. This is the way to do it in a recession, and I'm, of course, a little bit disappointed in myself that I haven't been managing to get this through to my closest friends here at headquarters, that this is the way to do it when times are tough, and they are right now. So normally, we work very closely with them. We talk about everything that needs to be executed, and we have a good plan for it going forward. Yeah. Yeah. It comes so many words out of my mouth. I'm sorry. Good words. No, no. I mean, we're trying to be as good as we can in all times, and we're trying more, now more than ever to be really responsible, which means that, I mean, we're trying to win. I mean, in simple terms, we're trying to win in capitalism. We hate to lose. We hate to lose. We hate to lose. And being responsible, being stewards of your money, and also being very responsible to the people that are employed, because I guess the question is partly directed to, like, how both we work with the CEOs, but also the patience that we have with CEOs if we think that they are underperforming. And of course, the responsible thing to do is to try to support them and help them to take the right actions for the company. But I mean, our first loyalty and responsibility comes to the shareholders and the Teqnion family as a group. It's not about having CEOs having their jobs for as long as possible, even if they don't do it well enough. Another question from Galileo is, are we involved in double-checking fact analysis on a subsidiary level when it comes to big projects? We as you and I? Yes. Yeah, we, we look at everything, all of us here do. We are a team, and we work as a team, and, of course, we have very individual tasks while we're out, meeting with our companies. But, it's a very, very much a team effort, and we are definitely involved. Good. Another question from Galileo is, "Are there any companies that we have acquired since I arrived that are going through any issue? If so, which one, and what are you doing to fix that? No, nothing. Galileo is perfect. Everything he touches is just gold. Easy. No, absolutely we have that, but I think that, we try to be transparent, but we also don't want to pick out anything, because there is certain things that not everyone needs to know about from a competitive reason, but also for internal reasons. As a group, they perform, I think you can see that in the numbers, but, some are performing, luckily enough, better than expected, and some not. Some on par. Yeah. Yeah. Good. Going back to the Teams chat, Mulder and Matth is wondering, "Would we ever consider divesting a company? And if so, what would be a valid reason? Oh, yeah, well, we've done it over the years. When we see that the product isn't relevant enough, the companies might be too small or not profitable enough, we don't see that it can. We don't see that it has the right to exist over a decade and so on, and since we're trying to do this forever, we need companies that without much of attention from us is going to continue and be relevant in a decade, and two, and three as well, which means that if we see that something is too fragile or too small or whatever, then we try to do something with it, so we don't have to focus so much on it in the future. And that have been historically that we closed companies down, or we incorporated the bits that are still relevant, we incorporated that into other subsidiaries. So this is something that we've always been doing, and we will, of course, continue doing it if we decide that it's the right way to move forward. Yeah. It's, as we said before, we're trying to be the best, and I think that... I hope that everyone understands the part of this chat, that we do what we think is the best in order to create the most value over time. And in a very simple theoretical world, getting rid of companies that lose money would be very easy, and suddenly margins go up and profit go up. But of course, in the real world, there are a lot of things attached to that, both when it comes to the actually not so easy to get rid of something that is losing money, but the bigger part is maybe the soft issues, which is both that we need, everyone that is working here needs to feel that there is no safety valve. Everything needs to be fixed, because otherwise, something happens in people's head. And of course, that is also something we tell everyone, that our favorite holding period is forever, and that means something, which we need to treasure as well. We do, yeah. Yes. Yeah. An email from Basar. It's a long question, but to summarize it, it's about the house builders. "Given that so many house builders are struggling right now, and the prices probably are cheap," which, yes, they are, "shouldn't, or should we look at buying more of those cheap and wait for macro to be better? Is this trick question for me? Yeah. No, we're not. I think we covered this topic before. No, we're not looking at buying any more companies from that industry. We need to be in industries where it's not that cyclical at all. And you can still love wooden housing without owning them companies producing them, I mean. Wooden houses, please, please, buy wooden houses for yourself and your friends and family. Exactly. Yeah. I mean, it becomes a little bit simplified, of course, when we talk about industries or verticals because it makes it so much easier to understand. But of course, in the real world, if you would look at a vertical, there are always good companies and bad companies for a lot of reasons. We talk about that we don't want to have contract manufacturers, but of course, there are good contract manufacturers. I mean, TSMC, one of the greatest companies on earth, they only do contract manufacturing. That seems to be working for them. But it also comes down to, of course, who we are. Obviously, we are not the best people to be best at running contract manufacturers, and on average, it's a little bit more difficult. We know that it's very difficult to find the best people all the time, so that comes down to complexity issue that- Absolutely. We spoke about. Yeah, it's the same complexity there. It's a, it's a much more complex business model. Yeah. Carl is wondering, "On the topic of earnings versus cash flow that you talked about here, how would you look at having EPS growth as a financial target versus free cash flow per share as a target? It's a question for you, right? Yeah, I can say that. We have a five-year target. So over time, as we said, the EPS per the earnings per share and the free cash flow per share should be very similar. But the free cash flow, of course, bounces a little bit more, and we believe that in order for us to run the company the best and in order to create or reduce complexity, earnings per growth makes it easier. But of course, if you put together our financial targets, one, two, and three, that basically you could back out what the free cash flow needs to be, because otherwise one and two cannot be in place at the same time. I don't know if that's some kind of answer, but I think it makes it a little bit easier to follow, and it makes more sense for us internally to not, by the end of the year, start saying that, you know, "Let's not pay employees in order to make cash flow better. Yeah. A question from Earnest Dust. He says, "As an investor, I've been trying to understand the size of the M&A runway. Is there a convenient description for the market where we perform M&A? There are some other serial acquirers, such as Lifco, who says that they only have three verticals. Constellation Software has software as many, but they are all VMS. How would you think about our M&A market, and how would we describe it? Okay. Yeah, we have. Yeah, it's Daniel that mainly do the search for new potential acquisitions. We look at many companies, because we're very picky with what we want to acquire. We meet with, you say, closer to 200 per year? Yeah. I maybe think we meet at maybe 100, that I don't see everybody you meet. That might be why. But we meet a lot of companies, and what we're looking for is, of course, companies that we believe is gonna be relevant in a decade and more, fulfilling these criteria that we mentioned already. They should be really good. They should have high margins, high return on capital, and they should produce something that's more or less their own, like their own brand name, their own design product or so, so they hold their own future in their own hands, so to speak. Also, we look at the free cash flow there. We look at how good they are at actually turning their earnings into cash. And, yeah, so we should understand what they're doing. We should realize that it's a strong and resilient business model, and we should believe that the people is really good at what they're doing. And then of course, there's so many other aspects to look at, but those are a few things that we definitely look for and try to pinpoint before we proceed to try to acquire something. Yeah. And maybe just to add two more points to that, not specifically pointing out another company, but I think that if you would start looking under the umbrella for some of the serial acquirers, you would see that they might have a certain name for the vertical, but that it's more of a name rather than something else, in order to help interested parties in kind of understanding what it is. We could make up those names as well, but it doesn't make any sense for us, because they very much work independently of each other. Yeah, we're not organized that way. No. And also, it would only be a facade. Yeah. And, um- We could call them Håkan, Anna-Karin, Mona, and Patrick. Yeah, we could. Absolutely. The second part of that, I mean, I understand it's really difficult to gauge how big the M&A market is, and I think one reason is probably because it's so much bigger than where we are right now. Somehow, just to put some words on it, we are in some kind of industrial business-to-business market, and then you can size up the size based on the geography and company size. We always try to learn. I think that, I mean, you have an engineering background, so that obviously helped when you started out doing more of the industrial stuff. I'm an economist, so I don't come from that side. I think that when I came in, it tilted our circle of competence a little bit. And then, of course, when we meet with these 100, 200 companies per year and we learn things from other companies, that also, hopefully over time, expands our circle of competence a little bit. So a very long answer, which is not really a crisp number. No, but of course, this is the part where me and Daniel really enjoy being and exploring and improve. This is so much fun, and we see that we have progressed a lot. Yeah. Yeah. He asked a little bit about the pipeline or how it looks for the future going forward, and it looks really, really good. Yeah. I want to say one more thing regarding that. I mean, when it comes to just... We have a lot of fun at our work, and it's a lot of serendipity. We, we don't know what's gonna happen every day. And some of our acquisitions are some things that we thought that we were looking at, and then we found kind of that thing, and that's wonderful. Some of the companies, like our latest acquisition, UK Lanyard Makers... I don't think in a million years that we would think that would be a great business, looking from the outside. But when we got the numbers and when we started to speak with the team in order to understand what they were doing, it was like, wow. They, they are so good. They are so good, yeah. Mufasa in the Teams chat is wondering, how do you replace subsidiary CEOs when they leave, retire? How easy is it to find quality managers to lead, quote, unquote, "boring businesses? Maybe for once they shouldn't be thinking it's boring. It's probably the best job in the world to run a business. The responsibility and also the full aspect of being responsible for a legal entity and all your coworkers, all the whatever you deliver to your customers, and all the relationships with supply chain and so forth. It's a really fun job for the right type of people. I know that we talked about this many times, but I think it's worth mentioning again. Acquiring companies can be really easy, at least if you don't care about what you pay for them. We care, so it's a little bit trickier for us. But when it comes to recruiting the right type of person to be in charge and take on the responsibility to run a business like this, it's really, really difficult, and there we have only now 18 years of experience, and we will never perfect that. But it's... We're at least very much better today than we were years ago. The hard thing or the real critical thing of building something, a group like this and scale it, is of course to have a recruitment process that will make sure that you get the right type of people running these businesses. I mean, we acquire the... Normally, we acquire a company from the founder or an entrepreneur that has been operating it for many, many years, and that person has so many hats. He sees that company from within and from afar, and he knows all the different notes of it. All of a sudden, we're going to recruit someone, and we all know and we're humble about that, and no one can come in and control all of those notes that is necessary and wear all those different hats that you need to be wearing as a CEO of a company like this. So there will always be a compromise, and that's why we also need the CEO coaches that are really, really good people, and they are all very familiar with how it is to run a company, which means that they can work closely with the newly employed CEO, subsidiary CEOs, and try to get them into the right, I don't know, into the right position, both when it comes to business sense and as a leader and everything else that is necessary. So short version of this very long and badly answer is, it's easy to acquire a company. It's really, really difficult to hire the right people to run the companies, and we have the greatest respect in that part of the business. Due to that, I mean, we've seen so many times that it's so easy, even if a high-quality company looks like a high-quality company, it's so easy to destroy it, especially a small company, but even large ones, mega cap companies can be destroyed by the wrong guy. I think that, I mean, what we try to do due to that is that we don't want to solve that problem until much longer in the future. So the majority of the companies that we have acquired lately don't have that problem in the near term. Either they're maybe in their fifties and want to stay on for as long as they work, which is hopefully five, ten years or more, and otherwise, that they already have a crown prince, crown princess in place that is maybe, I don't know, thirty-five, and if we treat them right, that's, it's gonna be fine for the next thirty years or so. Yeah. That's of course, the preferred way of how we find it by not doing it. No. Another question related to that we got in a chat from, let's see, from David. "Has there been much turnover of management at any of the operating businesses? Much. How much is much? Yeah, we replaced and we made changes to subsidiary management throughout the years, and that is maybe one of these learning curves that I just mentioned, that it's very difficult to find the right type of person to run a company because we just learned that it's not always the right way to advertise for a CEO, then you will get one type of people. If you advertise something else, we'll get another type of people. So what we do nowadays is that we try to headhunt ourselves via contact, via friends, via our network, and that has turned out so much better. But over time, yes, we replaced a lot of people, and of course, some people also figure out that they, they don't like the environment that we create or the culture that we, that we try to cherish and, and build on. So, but this is something that is a part of our everyday business, more or less, and since we try to be the best we can be, that's also what we demand from our coworkers. So, I mean, it's not, it's not easy to work here because we want to be the best, and we want to perform all the time, and we don't... and when we don't, we feel... Physical hurt, which means that, I think people more than notice that, and if they can't, they leave or we will make them leave. Yeah. We got an email from Georgie. Two questions. One is regarding the Net Debt to EBITDA ratio, which has increased from 0.5 to 1.2 over the past year. Could we comment about how we manage leverage? And do we plan to reduce the debt, debt level, or will you continue to use leverage for future acquisitions? Let's start with that one. Yeah, we, I mean, we have said we have one in our financial target that we should have net debt over EBITDA below 2.5. We think that is a little bit high, so we want to have some margin there. But, I mean, if we are also gonna use leverage, it's a good way for us to create value over time, and we still feel very confident at the level where we are now, and we're gonna continue acquiring in the same way. So we typically, just to generalize a lot, we say that we bring to the table maybe 50% of an acquisition from our own cash, and the rest is on the bank. Yeah, from where I stand, at least, the balance sheet is very strong. Yeah ... and we feel comfortable just continuing as we do. Yeah. Leverage will be part of our value creation over time. We do have a little bit of forced principal repayment, due to the bank commitments, and also, of course, over time, we want to grow EBITDA, so, if we don't acquire, which we will, but if we wouldn't, the net debt divided by EBITDA should go down over time. The second part of Georgie's question is regarding the, margins which have decreased. The EBITDA margin has gone from 11.7% to 10.9%. Can we talk a little bit about why the margins have gone compressed, and what we're gonna do to make it better? We're gonna make sure that most of our companies, all of our companies, are earning money. That is, that is the key here. The struggling companies are dragging the whole down, and, and that is what you see, more or less. Yeah. Gonna make this longer. Please do. I mean, it's always about people, and I think especially when it comes to these small companies, because it's easy to talk about a company, but in some companies, there are, like, eight people and maybe making, you know, SEK 1 million or SEK 2 million per person, in some of the cases. So it's really about the people, and the opposite is also true. You once said before, I mean, when we're not good enough, we feel physical pain. It's difficult to sleep. It's difficult to be engaging when you're sitting with your spouse and having dinner because you're thinking about, "How can I fix this company?" And, I mean, in a certain way, I wish for us that we didn't feel that, but it's also what makes it fun and exciting and hopefully, over time, better. And the extension of that is, of course, that we also want people in all of our companies that feel a little bit like that. We, we don't want anyone to feel bad, but of course, if you don't feel that, it will be very difficult to do the right things, the needed things, when the company's doing badly. What you said is that we want people to feel bad when things are bad? Yeah. Yes. Of course, we don't... Yeah. Exactly. I'm so happy that you put so many words on it because it was so much better. Coppice is wondering, do we consider using share buybacks when it has higher return on invested capital and buying opportunities in the market? We are not allowed to do buybacks on the Nasdaq First North Growth Market, where we are listed today. We are, we have been and are still talking about some time in the future, maybe move to the main market, and in that case, we will have that capital allocation opportunity as well to work with. Right now, we don't. Yeah. We got a question from Lucian, who was wondering about underperforming businesses, if they are due to cyclical industry or inherently poor businesses, and if we would like to divest them. I mean, it's both, but I mean, there's not, there's no such thing as just by rule, poor businesses. It's always, businesses, as we mentioned, are always run by people and humans, and they, you can always make something good. So there is an evaluation period to see, is it possible to make this into a good company? And if we can, at some point, say that it's not worth it, then we have to do something else with that entity. The cyclical ones, of course, is we're stuck with that when it comes to the cyclicality, but we're not stuck with that forever if we decide to do something else with it. So, it's always up to the people and how we run things, and we are, we're working very hard with those things right now to make the right decisions for the long term. Yeah. I think Johan wrote that roughly a third or so of our companies right now do not contribute on a profit level, so they're losing money. In a normal environment, that number would be closer to maybe 10%, because everything is kind of cyclical. It's just cyclical, it's correlating with different things. The grid investments or the military investment, or just economic cycle. But I think 10%, as you said, roughly is kind of normal. So right now we have more than that. I think that if the economy was as good as it was two years ago, the number would be closer to 10%, and I mean, it's not what we're waiting for, as Johan said, especially in our companies that are so small. If the right person, with whatever that means, would be running the company, they would all be making money. They're not inherently bad, and because they're so small, they could do something else, or maybe not completely, but something differently. Enough to make them profitable, and that is our target. We got a question from Oscar. "Can you please describe how the long-term incentive structure looks for key people at Teqnion, subsidiary CEOs, people at Teqnion, including yourself and Johan? I'll try to keep it short, I think. What we have is, we have a cash bonus structure which is measured over a year's earnings. So as long as you increase the year's earning compared to the last three years' average, then you will get a small percentage of that increase, and that's the same for us here as it is for the subsidiaries. We have it on the group, and the subsidiary CEO has it on its own subsidiary. We have unfortunately not had option programs for a couple of years now, but we are hopefully giving the board the mission to put forward a suggested option program for subsidiary CEOs and the top management people for the annual general meeting this spring in 2025. Yeah. Pedro Leon is wondering, "In which markets or companies are you seeing better development, opportunity scalability for the next five, ten years?" It's a very difficult question. We- I only see opportunity all the time, everywhere. Me too, and maybe especially the ones that are not doing great enough, right now. But obviously, everything we acquire, we think... This is the funny thing with the investment, right? Because every company that you acquire, every stock that you buy, you think it's gonna perform well, because otherwise you wouldn't buy it. But of course, things will not work out for various reasons. For us, we can hopefully fix it, compared to only buying a listed share. We can also destroy it, which is the flip side of it. But some of the companies we buy because we don't think or don't want them to grow, we think they're gonna do GDP plus a couple of percentage, mostly due to pricing, and that's wonderful. Then we buy, use the money and buy new companies. And for some, we think it's gonna grow a little bit. But for us, I say a little bit, because for us, organic growth of maybe 10%-15%, that's big. That's really big over time. And we have some of those. I don't think... Yeah, I just agree on everything you say, and what we're trying to acquire is companies with a solid history of low growth, but very stable growth. And that is also the main idea for Teqnion as a whole, that we should slowly grow organically over time, but the increase in all the returns that we should develop is coming from the acquisition pipeline. I mean, that's the main reason that we do what we do, that we collect the cash that our fantastic subsidiaries collect for us, and then we use that and allocate that capital into new acquisitions. And that's how we grow both the earnings over time, and we also grow the robustness of the group as a whole. Yeah. In the interest of time, let's try to keep it short, so we can- Yeah ... make the last ones. Yeah. Keith is wondering, "Can you talk a little bit about UKLM? From the outside, it doesn't strike me as an obvious great business." Let's start there. Okay. Do you wanna do it, or...? Numbers are great. If you knew what we knew, I think you would be happy. That's a very non-answer, but what they focus on is that they deliver a very quick turnaround, and at the right quality, at the right time. So what they're doing is, yes, it's a lanyard, but they're selling to customers, really blue chip companies that you probably maybe have invested in yourself, and where they usually use it either as a ticket or an entrance or an identification. So when, for example, NVIDIA or Nintendo is gonna have a big engineering, get-together with two thousand people, they need to have different lanyards, so you can get in. And the asymmetry here, which is really what we like, because the person that's gonna order these things never cares about the thing until it's almost too late. Because you have to do all the other important things first, like getting food, getting the people, getting the logistics, whatnot. And then one week before the actual event, someone's gonna ask, like, "You want to order these things?" And then Johan hasn't, because he's been working all night on doing the other things. So you need it in time, because if it's two seconds late, or let's call it one day late, it's worth nothing, and these are the guys that can do it. That's one part of the answer. They carved out a small niche in a very defined commodity business. Yeah ...highly competitive business, and they carved out a very narrow piece of the pie, where they can deliver something that is requested by the top performance, and that, that's a fantastic way of doing business. Yeah. The moat here is really good, it's reputation, because if someone else would come in and say, "I can do the same thing," let's call it half the price, most of the companies would say, "No, it's not interesting," because it's... If you succeed, you're gonna save GBP 250, nobody's gonna care. If you fail, you might lose your job. Sorry, long answer, but interesting. Can we talk a little bit about, the external costs that have gone up, 47% year- on- year? What drove the increase? We have increased the costs in traveling costs, right? Yeah. Some of it is, of course, necessary in order to increase sales. Some of it might be not. We also increased the marketing costs. I don't really like that. We haven't really evaluated it yet, but I think it's a little bit too aggressive, and it's nothing that I hope you're gonna see in the future. No. We work a lot with trust, but we are doing more and more validation and doing the clear scenario. I mean, a lot of companies overall, and of course also, with our group, are doing marketing for the sake of marketing. And I mean, it's. The math is really simple. Whatever you spend on marketing, you have to make it back at least 1X on gross profit, otherwise it's net zero, right? But of course, 1X is not enough, you have to do it at 3X, 5X, or whatever. And for some of the companies, unfortunately, I don't think they're living up to that, and that is gonna change. Kip has also been doing a little bit of math. So on a whiteboard, we have written that, the bottom third companies lost 12.6%. Sorry, Yeah ... the bottom third lost 12.6%, whilst the three that we pointed out only, quote, unquote, "lost four." The remaining 8.6%, how is that distributed? Yeah, and I think you said it earlier during this call. We don't go into details- No ... more than that. I'm sorry, but it's, we keep it on this level, and we tell you that we are on it. Carl is wondering, "You've been focusing on acquisitions in U.K. for a while. What are our initial reflections compared to Sweden? The first impression was that good entrepreneurs and good people are good in England, as they are in Sweden. Just to emphasize that, I believe that it's the same type of skill set and personality necessary, no matter where in the world you are, running a small business with a good profit and a good market future. I'm so happy that we're there. There's still so much to do. There's so many more companies there, great entrepreneurs, great people, and I believe we have more to do there. Yeah. Lucas is wondering, a little bit of our acquisition strategy. As Teqnion, well, Daniel has done an exceptional job business sourcing acquisition. Thank you. It's likely that Teqnion grows, he will need some help. We all need help. Right now we are. Yeah, Daniel is taking the lead. He's dragging me along where he believes I can do some good. We also have a new coworker, Jonathan, who helps out a bit and has started to take his place in this type of work. So, this is like everything else within us growing as a company group. We scale this thing as well when we see the need for it, and it's gonna happen here as well. Yeah. We also think it's possible to scale maybe without adding FTE. We have maybe a few tricks up our sleeve. Question regarding return on equity. We reported 20.4% this year. Do we have a minimum target for this metric? Officially, no, we have only our financial targets, but this level is not adequate. Short answer. Morris is wondering, "Why is free cash flow before acquisition lower compared to last year? We, yeah, it's both. We locked up some in inventory on receivables. We pay more in interests. Yeah, it's all over the spectrum, more or less. Yeah. There's no one clear thing, except for that it has not been good enough. It's, it's not across the line of all companies. There are a few that have been, not only this quarter, but over a while, been dragging. And it's, of course, momentum in both the things are happening, but also in the people, in the, in the way people behave and work. Steven from Australia is wondering, What timeframe do we mostly work on? On the quarter, year, next year, et cetera? Oh, what a difficult question. We work on all timeframes. Well- We work for the next hour, we work for the next decade, and we work until the horizon. So depends on what task and what topic that lays ahead. Yeah. We try to be quick to action in everything that we believe is necessary to be quick- Yeah ... to action at, more or less. We don't work towards optimizing a quarter or a month or even a year, but, I mean, we're not hiding behind the fact that we are gonna be good long-term, because the long term is, of course, just a lot of short terms strung together, so as Johan said, it depends. Some companies, there's not a lot of need to focus on today. But for some companies, when it comes to, for example, marketing spend, if that's not gonna yield anything in a year or five years, it's not gonna yield anything now either. Should we be working harder towards acquiring some businesses that are less prone to economic cycles, and even if it means paying a little bit more? We, I think, we're really happy with the way we value companies, and the rest of the question I think that we already answered. Yeah. Good. One more question from the email side, from Andrew. What time and effort are we using to manage the underperforming businesses? Is it yours or the CEO coach's time or someone else? It's all of our time, but it's the first line of defense, of course, the CEO coaches, and they have each other to support each other and they get ideas from, and of course, they use all of us here as well, and it will always be in a way that we will always put the most time and effort into struggling companies, and those companies are always gonna differ over time, depending on what type of industrial cycle we're in, but of course, we're helping each other out, and we are very focused right now on pinpointing where we see we can do most good in the short term, and yeah, but I... Maybe I answered it. I think so. Volmi from the Teams chat is wondering, "Our recent acquisitions in the U.K., does that mean that there is more competition in Sweden?" Yes, is one part of the answer, but it's also... I mean, it has been quite a lot of competition for a while. Looking at the multiples, typically they go for much higher than what we are ready to pay. But we also have had a clear strategy that we want to have diversification, and to build outside of the U.K., sorry, outside of Sweden. And now, U.K. plus Ireland accounts for roughly half of the profit in the quarter. But of course, it shouldn't be like that, because they're only less than a quarter of the number. Yeah ... but it's very helpful when you're not losing money. Last question, maybe: "How will Teqnion look in 10 years when it comes to geographical diversification? Sorry, I tried to read something while you asked. Sorry. I'm trying to figure out what I think. I mean, 10 years is a rather long time. We are in Sweden, U.K., and as you want to say, we're looking at other markets, and we talk with people outside every now and then just to learn a little bit more until we feel that we're ready for it. Yeah. I think I would be surprised if we haven't bought anything in the other Scandinavian countries within 10 years. I mean, we have always, even, you've been with us now four years. Yeah. I mean, from the beginning, you and I have traveled to other countries as well. I did it for myself for many years also. Yeah. So it's just, we never found a good fit up until now. Yeah. But we, of course, gonna do that. Yeah. So it's gonna happen, but we don't know when. I also think that we might be in another country, but can't tell you which, because we don't know. Okay, last question from Håkan. "We seem to be quite focused on improving the sales effort. How do you impact this while managing the rest of the portfolio and acquisitions? We do what is very hard. We try to prioritize our time and do the right thing, and focus on activity that will show effect on the short term, because there's so much that... Of course, maybe the question is also, you can't run all the companies. I mean, the business model is that it's gonna be a diversified group with autonomous subsidiaries, which run themselves more or less, and in cases where we see that they need support or a lot of support, then we need to be there, and now, since the economy is bad, and we haven't performed well when the economy was good, now we have so much to do when it comes to just perfecting the way of running a good business, a healthy business. Then we just have to work harder and prioritize better, and that's how we do it. Yeah. When running a company group or running a company whatsoever, I mean, how much you need to work and what type of activities you need to do will differ over time. Some periods are rather slow, then you can focus on strategy, maybe ambitions for the future and whatever. Right now, it's more like running sales activities, reducing costs, doing all these things that is more hands-on operational tasks. One thing that is very important while saying this is, of course, that Daniel is a torpedo focused on acquisitions, has been for a while, and still is. So we just drag some smart ideas out of his brains in between acquisition meetings. So it's the rest of us that's trying to focus on what we have in the current group. Yeah. Maybe just one thing to add, sort of drive this home, feels important. Yes, we focus a lot on the sales effort. And the reason for that is the majority of our companies, and I would say 100% of the companies that we've been acquiring, because it's part of our acquisition strategy, they have a product platform and relationships that should be super high value, which means that they can have really high margins. So as long as things are going through the door, they're gonna be really profitable. That's the type of companies that we're looking for. And, I mean, and of course, when that doesn't happen, because some people or some companies are not really focusing on the active sales, then they suffer. But for all of our companies, that is a very simple, maybe not simple, but in theory, simple switch to push, and we have good examples. We have, for example, Lundahl Transformers, where we have a new CEO since the beginning of the year, and she's a torpedo for real, and is out there talking with customers, and suddenly, you of course don't see that, but we see things happening in the numbers. Of course, it's a small company, so it's not gonna tilt the whole thing, but that is- It's once again, it shows that good activity actually shows the results. So we can use that as an example for our other coworkers that, look, if you actually go out and build relationships, things are gonna happen in a positive way. And this is something that is so fun, that every time we do this and use these examples, and we get to motivate someone to do a lot of more activities than before, and everyone gets so surprised, "Oh, look, sales are coming." Yeah, that's the magic. If you do good things, good things will come to you. So of course, it's not fun to present a quarterly report like this, but we're very confident for the future, and we have great people working here, both when it comes to the subsidiary management and also on this team here at this office in Solna. Yeah, we're in for the long run, and we're gonna succeed because we wanna win. Thank you very much, everyone. Hope that you have a great week. Thank you so much. Bye-bye. Bye-bye.