Earnings Call: Q4 2020

Feb 11, 2021

Ladies and gentlemen, welcome to the CORE Service Management Q4 Report 2020. For the first part of this call, all participants will be in listen only mode And afterwards, there will be a question and answer section. Today, I'm pleased to present President and CEO, Anna Kari Grundy. Please go ahead with your meeting. Thank you, and good morning, and welcome to this presentation of course report for the Q4 2020. I hope you all are healthy and safe in these times. With the report released earlier this morning in today's presentation, We conclude a 2020 that turned out to be something very different than all of us expected a year ago. And given the special circumstances, I'm proud to see that we, in 2020, have really shown the strength of the core business model and the core organization. Most of you probably know Korg quite well by now. But for those of you listening to us for the first time, I will give you a very short overview of our company. Core is the Nordic market leader in integrated facility management, delivering a broad range of services within workplace services, Property services and strategic advisory services. We have a turnover of SEK 9,600,000,000 over the last 12 months, generating an EBITA level of SEK 556,000,000, taking us to an EBITDA margin of 5.8% over the last 12 months. We have around 11,200 employees, which translates into approximately 9,000 FT feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet Es. Sweden is by far our largest market, accounting for 50 To 1% of our turnover, Norway is 2nd largest with 22%, followed very closely by Denmark with 20% and Finland with 7%. When splitting core by contract type, You can see that 58% of our turnover is generated from integrated facility management contract and 42% It's single service, mainly related to cleaning and property service. The ISM share of the total turnover Has been over 60% when you look back. The main reason why that level is now below 60% It's related to the drop in food and beverage volume that we have seen during the pandemic. Most of our food and beverage volumes or part of our IFM contracts. And in the previous reports during 2020, we have provided a summary of how COVID-nineteen has impacted Cor and how we have handled the situation. I continue with a similar summary also for Q4. Our number one priority is always the health and safety for our employees as well as for our customers' employees. We follow the recommendations from the authorities in the respective countries to support the effort in reducing the spread of the virus. We are proud to see how our services contribute to maintaining critical functions in our community as well as supporting in their efforts to handle the COVID-nineteen situation. COVID-nineteen has had a negative impact on variable volumes at core, mainly within food and beverage, but also within property related projects. On the other hand, we have seen an increased demand for cleaning, yet the net effect is still negative. Our subscription volumes, accounting for some 70%, 75% of our total turnover, Remain strong, which is creating stability for us. We have a close partnership with customers to find suitable solutions, both from a short term as well as a long term perspective. Since the early days of the pandemic, we have prioritized Cash flow and strong cost control to minimize the negative impact of COVID-nineteen. And from a cost perspective, we have been addressing all types of costs, including subcontractors, purchased goods and internal costs. We have utilized furlough schemes in the different countries, but the level of Affected by furlough schemes is now down to 2% of our employees by the end of Q4 compared to 20% by the end of Q1. So by the end of Q4, most of the people on furlough schemes or employed in our Norwegian operations. In Sweden, Core left the furlough program and no furlough Report has been received in Q4. Cash flow remains strong without negative changes in payment patterns from Corporate customers. The deferred taxes and fees in Denmark and Norway that impacted Q2 and Q3 We're paid in Q4. Our balance sheet is strong with a high level of unutilized credit lines. 2020 has been a challenging year in many aspects, but I'm very pleased with Our performance. We have once again showed strength in our ability and capacity to rapidly adapt to the changing situations. Our customer centric business model and our well managed decentralized organization have really delivered during 2020, and this is evident by looking at both earnings and cash flow. Because of COVID-nineteen, we have a negative organic growth both in the 4th quarter as well as for the full year by minus 7%. We have negative organic growth in Sweden and Norway, while both Denmark and Finland shows organic growth in the quarter. The positive acquired growth Of 1% in the quarter and 2% for the full year is fully related to the acquisition of Norlands Milli Award in Sweden that we did in November 2019. Continuing with the EBITA margin, we See the results of the strong focus and adaptability across the entire organization on costs and efficiency. The group EBITA margin is 6.2% compared to 5.6% in Q4 last year. 3 out of 4 countries improved their EBITDA margins in the quarter, while Norway is on par with last year. And Klas will take you through the individual countries in a couple of slides. The EBITDA margin for the full year is 5 point 8% compared to 5.3% last year. Cash conversions It's an LTM number, and by the end of Q4, it was 108%, which which is above our target of 90% and somewhat better than last year. Leverage is also an LTM number, and during the quarter, we have continued to reduce our utilization of the RCF financing. This takes leverage down to 1.6 and well below the target of staying below 3. We are happy to reinstate the dividend after withdrawing it last year. The dividend proposed by the board is SEK 4 point SEK 4 per share, where SEK 2 is ordinary dividend and SEK 2.4 is extraordinary dividend and to be paid in 2 installments, the first in May and the second in October. So if we're then looking at highlights from Q4 and significant events after the end of the period. In December, we launched an organizational change to increase focus and speed On service development, innovation, digitalization and sustainability, the overarching principle of highly decentralized Organizational model remains, but given some of our group functions a strengthening mandate and responsibility, Each country also strengthened their center of excellence functions, and we work in closer cooperation with the group functions. And during a challenging year, we are particularly proud of that we succeeded in increasing both our customer and Employee satisfaction index. Customer satisfaction increased from 68 to 70 and is a good indicator of healthy customer relations. We are also delighted to achieve an increase in employee satisfaction index for the 6th year in a row, up from 77 to 78 in the 2020 employee survey. The contract portfolio has developed in a positive way both in H1 and in H2, and you will see the details around that shortly. Retention rate Continue to be on high level also in 2020 at 92%, and 92% is also the average when looking at the last 3 years. Just like we mentioned in the Q3 report, the sales pipeline Looks very strong, especially in Sweden and Denmark, but there are opportunities also in Norway and Finland. And there are several large processes ongoing as we speak. From an M and A perspective, The activity level is high within core, and we also see activity in the market in terms of incoming calls to us. I continue with major events from the beginning of 2021 and start with the loss of the Equinor office sites. Equinor has been and will still be a large and important customer to Core. Equinor has decided to move into the final phase of the selection process with another service provider, Not prolonging the office contract with Core. The contract with Core continues until the end of October 2021. It is disappointing that we did not win new contracts for the office sites, but It is also the name of the game in the FM industry. You will sometimes lose a contract. And over the years, Core has been successful in winning new contracts and keeping large contracts for a long period of time. By learning from the process with Equinor and continue developing our offers and solutions to the market, we are confident that we will still stand Strong going forward. And just before the release of this Q4 report, we signed the deal of Acquiring Arup Co Service in Norway. Arup Co Service is a well run family company that provides Cleaning and food and beverage services in the Stavanger area. The company generates annual sales of approximately NOK 80 NOK 3,000,000 and is an important acquisition that strengthens our position in Norway, both in single service as well as in geography. 2020 has been a very special year and there is still uncertainty around development of COVID-nineteen, but also positive development in terms of vaccine. We believe Core is well positioned for the future. We are market leader in a geographical market where there are growth opportunities going forward. Based on our experience, a crisis tend to lead to increased outsourcing. We saw this after the Financial crisis as well as where the Norwegian oil and gas industry experienced a challenging time. Business and public sectors will look for efficiency and core sales and delivery efficiency. And As mentioned, there will be opportunities for M and As, especially when looking at the fragmented single service sector of the Nordic FM market. The trend of remote working started well before COVID-nineteen, but has been accelerated by the pandemic. We expect that the remote working will increase from approximately 0.5 day per week pre COVID-nineteen to 1, 1.5 days per week, but there will be variations depending on industry There will also be difference between manufacturing sites, including white color work close to manufacturing site compared to pure office sites. We also expect difference between urban areas and rural areas. If you have a long commute to the office, You are more likely to work from home compared to a situation where you only have a very short drive. We believe there will be likely a trial and error phase for 1 to 2 years where companies or organizations test out We also expect companies and organizations to develop their offices. And with our service and Interact and be creative together in a safe way. When making the office more attractive, the service level tends to Increase. The demand for digital and technological solutions has increased previous years, and we continue to increase. With our strong position and ecosystem of innovation partners, We are well positioned to engage with customers to make the workplace and service pandemic safe through smart Technology. Food and beverage that accounted for 15% of turnover prior to COVID-nineteen It's expected to be negatively impacted also going forward when it comes to food and beverage deliveries in the urban areas or at pure office sites. Less or no negative impact is expected, for the example, industrial sites and hospitals. Property services accounting for close to 30% of turnover is expected to remain relatively stable over time. We then expect increased demand for professional cleaning also in the future, and cleaning is Core's largest service line with accounting for 30% of turnover. So with that, I will hand over to Claus to take you through each Thank you very much, Anna Karin. If we then look into the country by country details, we see, as mentioned by Anna Karin, that we have a negative organic growth In Sweden and Norway, while on the positive side, we see that both Denmark and Finland is showing a positive organic growth in the 4th quarter. From a margin perspective, Q4 is very strong, and we're very happy to see that Sweden, Denmark and Finland are all improving their margins compared to Q4 2019. Norway is on par with last year at 6.2%. In Sweden, We see a similar pattern as we did in Q3 and also in Q2 that we are dropping the variable volumes in terms of food and beverage And also some of the property related projects. The demand for cleaning continues to be high, and we still have A positive impact of the large IFM deal we did with IKIA and started in November 2019. The The same goes for Nolas Miliuovoort that also came in our books in November 2019. From a margin perspective, we continue to see the positive effects from the strong organization focusing on cost control, efficiency, And we also have a positive impact from a more favorable volume mix in the quarter compared to Q4 2019. In Norway, situation is also similar to Q3 with a drop in food and beverage volume. Cleaning continues to be strong. And in Norway, we actually had a quite good quarter when it comes to property related projects despite the general restraint that we have experienced in the oil and gas industry. Denmark, the positive organic growth is Related to the extended and expanded contract with the Danish police, the PKA contract, and also the increased demand for cleaning across Denmark. And that actually makes up for the losses in food and beverage volumes and also some drop in Property volumes in Q4. As in the other countries, the Danish organization has continued the strong cost focus and efficiencies, and we see an improvement both in terms of margin, but also profit in absolute numbers in Q4. Finland made another strong quarter with positive organic growth, mainly related to the new OP contract started in May and additional cleaning volumes. Both profit and margin improves compared to Q4 2019. If we then move on and look at the contract portfolio development in 2020, we had a positive Effect in H1 that we presented in the Q2 report, there we had a positive net effect of around €60,000,000 In H2, we won new contracts to a value of approximately €150,000,000 And that gave us a net impact in H2 of around SEK 100,000,000. So that takes us to a full year net of roughly SEK 160,000,000. If we then continue with the P and L And look at some numbers in more detail. We see that net sales is down by approximately SEK 250,000,000, And that takes us to a total level at just below SEK 2,500,000,000 for the quarter. The organic growth, as Anne Klein mentioned, is minus 7% acquired growth, plus 1%, and then we have Some small negative FX effects of approximately 3%, mainly related to the Norwegian NOK. EBITDA is SEK 153,000,000 compared to SEK 152,000,000 in Q4 2019, And that takes us to a very strong EBITA margin for the quarter of 6.2%. With a lower level of IAC And more or less unchanged levels when it comes to the financial net taxes and amortization, The adjusted net income for the quarter ends up at $97,000,000 compared to $90,000,000 in Q4 2019. Looking then at the full year numbers, you see that net sales totals up at SEK 9,600,000,000. Organic growth also for the full year is minus 7%, while the acquired growth is plus 2%, And FX effect was minus 2%. EBITDA improved by SEK 7,000,000 to SEK 5.50 SEK 6,000,000 for the full year, and that gives us an EBITDA margin of 5.8%. And the adjusted net income for the full year improved from SEK 355,000,000 to SEK 384,000,000. Next, We'll take a look at the cash flow and the sources and usage of cash in 2020. We started off With an ongoing cash balance of SEK497,000,000. Operations have then contributed with a plus SEK 781,000,000, Very strong contribution. And then if we look at the financing flows that is reflecting interest, loans and leasing, that adds up to minus SEK 821,000,000 And the largest part of that is actually related to us reducing our debt level by lowering the utilization of the RCF financing. Taxes paid is SEK 46,000,000 And cash out from M and A is SEK 12,000,000, and that reflects the last part of the cash payment related to the acquisition of Nordland's Media Award. And that takes us to an outgoing cash balance for 2020 at SEK 3 SEK 96,000,000 Looking then very quickly at some of the details from the cash flow. You see that cash conversion is 108 percent, slightly better than the level that we had in last year. That's driven by strong result, CapEx discipline and continued focus on working capital across the organization. There are also some positive impact on working capital from a somewhat more favorable calendar in the last year last week of 2020, with more continuous working days compared to the year before. A lower level of property project also reduces the levels of capital Tied up. Continuing then with some of the Details from the balance sheet see that net working capital is negative with SEK 881,000,000, and that equals minus 9.2 percent of net sales. Net debt is SEK 1,200,000,000. Leverage is down to SEK 1,600,000,000, well below Our own target and also the covenant level of SEK 3.75. And as you can see, we still have a very large part of unused So with that, I'll just hand over to Anna Karen to sum up before Q and A. Thank you, Claus. And I'm as I mentioned before, we are very proud of what we have done during 2020 and show the strength of the core business model and the core organization. We have a negative organic growth in the quarter by minus 7% as well as for the full year, driven by lower variable volumes even though our subscription volumes remain strong. The successful acquisition of with 1% acquired growth in the quarter. We delivered an EBITA margin of 6 0.2% in Q4 and a full year margin of 5.8%. Cash conversion and leverage are both On strong levels, the LTM value for cash conversion is 108% and leverage is at 1.6%. We are very happy to reinstate the dividend after withdrawing it last year. The dividend proposed by the Board of Directors It's SEK 4.4 per share, where SEK 2 is ordinary dividend and SEK 2.4 is Extraordinary dividend. So we remain positive for the future, and there are interesting opportunities in the Nordic region and a strong pipeline ahead. And with that, we will open up for questions. Thank you. Our first question comes from the line of Erik Paulson from Nordea. Please go ahead. Your line is open. Yes. Hi, it's Erik. So first of all, can you please outline the contract It is that are coming up here during 2021 that you bid on, etcetera, the larger ones. Yes. Thank you, Erik. As we mentioned, we have a very strong pipeline, And we can see a mix of both large cases as well as medium and small cases in the line. We can also see a mix between private companies as well as public companies. Okay. And is it possible to give some more granularity around that and timing, etcetera? Well, what we saw during 2020, there was quite a large pipeline as well, but some of The large cases were postponed or delayed, and I think we see that coming now during 2021. Okay. And then talking about contract endings, you had that Equinor contracts or parts of that. How does it look like regarding that in the coming quarters here now? So contract endings and risks relating to that in overall. I mean the largest contract that were up for renegotiation is the Equinor contract, And then we communicated the part on the office sites. And as we also mentioned, the production sites It's being handled in a separate process, which we are taking part in right now. And it's a different team from the Equinor side. It's Different type of process and so on. So we remain positive in terms of keeping the production sites, but the process is ongoing. Apart from that, there are no major prolongations in the near future. Okay, great. And then a final one, you touched upon it here regarding office spaces, etcetera, Potentially, if we're seeing in the underlying market decreasing the amount of square meters, etcetera, and you mentioned here going from potentially 0.5 days Working from home up to, I think you said, 1.5 days. But what do you see the time horizon here going forward? And what's the risk For you, Indesen, can you actually utilize it in a better way for you as a business opportunity going forward? Well, as we mentioned, we think we will during the coming years, 1, 2 years Ahead, we will see a trial and error phase. I think we will see that different kind of customers in different kind of industry, they will Go back to their office in different kind of phases, I think so. So but what we can see is that we need to stay very close to our Customers and make sure that we can provide them with actually new kind of services when we are in that kind of trial and error phase. But actually, we what we have seen so far is that but also the level of services Increases during that phase as well. And just maybe a follow-up finally there. Can you just tell us what the share of white color and the blue color is, respectively, for you in total? We haven't disclosed that split because we don't think that, that is a super First of all, it's quite difficult because you do have a lot of white color people working at manufacturing sites and so on. So it's not completely relevant To do a split in white color versus blue color, it's more interesting to look at how the different industries and so on develop over time. All right. If I rephrase it then, if you could give a breakdown regarding Types of works where you can actually work from home and like workplaces where you cannot really do that? I mean, if you look at our customer base and where we do see that a lot of people have been working from home during the pandemic, it's Very much concentrated to business services in the main cities in the Nordic region. And that's not our largest customer base, so to say, if you think about banks, insurance companies and so on. List and so on. All right. Thank you very much. Thanks, Thank you. Our next question comes from the line of Arthur Hager from Hoag Capital. Please go ahead. Your line is open. Our next question comes from the line of Ed Heger from HOK Capital. Please go ahead. Your line is open. Yes. Thank you for taking my question. The first one comes to top line. Given that The office contract with Equinor rolls off pretty late in the year. And your comments on the pipeline, it seems to me that you're very confident in Organic growth in 2021, is that correct? I mean, the loss of the office Sites for Equinor will have a limited impact in 2021. And then, of course, It all depends on the win rate and so on. But given the history and our, let's say, normal win We do think that we have a good possibility of reaching organic growth in 2021. Thanks. And then the second question relates to the gross margin and pardon my ignorance here, but If it's 10% or 10.5% or 11%, it matters a lot on the EBITDA level. Could you just provide some color on to what Factors can affect the gross margin and to which extent you can control those factors from quarter to quarter? I'm not Sure. I fully understood your question, Ade. You mentioned the gross margin and how that develops from quarter to quarter or Yes, Yes. And it kind of it has a pretty big impact on the bottom line, whether it's 10% or 10.5% or 10.8, right? So what factors do affect the gross margin? And to which extent can you control those factors? Is it just Arbitrary, so to speak, from quarter to quarter? I mean, looking at the gross margin and looking back at that, that has been around 12%, 12.5% for core. And I mean, what really impact the gross margin is the work that is Being done out in the organization in all the different contracts. And as Anna Karin mentioned before, I mean, our ability to adjust to change needs and every day looking for the small efficiency or cost control and so That's really what drives the gross margin in combination with, of course, being clever in utilizing your resources when you Some extra demand for certain services and so on. So basically, it comes down to hard work in the organization. Okay. And the first question for me. On the working capital, it's a pretty good ratio you Announced this time, what should we consider a reasonable ratio? I think it was 9.2%, if I saw correctly. What's the reasonable level there over time for the business? I think it's better to look back at history and see that we have been more consistent at around minus 7 Then or something like that. I think minus 9% is a very low number. And As we say, I mean, with the lower level of property related properties, we tie up less capital as well. So You shouldn't expect minus 9% going forward. Okay. Thanks. Thanks, Atle. Thank you. We have one more question from the line. Our next question comes from the line of Karl Johan Bjornenweil from BNP. Please go ahead. Your line is open. Thank you very much. Good morning and congratulations to good development in the challenging year with a lot of moving parts. A couple of questions, if I may. First of all, coming back to Erik's questions around the on-site service opportunity that you show on the on Slide 6 in your material. And according to when you look at this, It sounds like, say, you're in waiting something that you've now seen in 2020 as Variable volumes going deep cleaning into the offices and so on, maybe becoming more of a regular Service and that potential then balancing, I guess, the work from home utilization or smaller office spaces. Is that a way to Hi, good morning, Pall Johan. Yes, I think you described that in a very good way. I think we have seen increased Cleaning during the pandemic, and we see that yes, we think that increased volume will stay even after the pandemic. And we actually expect a return of volumes, for example, food and beverage, when we can see the effects of the Seeing and people start to go back at work, we can see that our food and beverage volumes will increase as well as for the property related Many of our customers, they have postponed a lot of projects, and they will most probably be back in a couple of months. Excellent. And if I split that up, and if you're looking at food and beverage, I think you mentioned that When you look at rural sites and hospitals and so on, you wouldn't expect a lot of change now when volumes comes back on Compared to what you saw historically and maybe more of a challenge in urban areas, how is your split looking at food and beverage in those two parts in a normal year? We have a larger part of our food and beverage service related to larger IFM contracts Actually outside of the pure white color offices, there are, of course, some food and beverage deliveries Also to the pure white color offices, but the majority is actually outside of that area. So majority would be, say, what you could say, they're unaffected at the end of the day when you get back to some sort of normality. A little less affected Less effect. That's probably a good way of putting it. And then looking at the on-site service part of this, if you then try to play this out, say, over a 2 to 3 year Effective with the extra cleaning services becoming the normality, so to say, and then maybe slightly smaller office spaces, How do you think the net net of that would affect your business? Is it a positive or negative? I think that's Very difficult to have a firm view on that. But given the fact that cleaning is our largest service line, that So to increase in importance during 2020, I think that is a big positive part of it. But then there are so many other That could impact that going forward. So hard to have a really firm view on that. It's good for us that cleaning becomes More than a commodity. And I noticed you mentioned volume mix as being a margin In the quarter, what's the underlying impact there? I mean the volume mix is related to us losing the volumes primarily in Food and Beverage where we have had A lower margin, and then we've been able to sell additional cleaning projects at a higher margin. It has, of course, a positive impact, but we haven't quantified And we'll not quantify it either. That's interesting because when I look at, say, Compass, Sodexa and so on, obviously, they have Higher margins in their food and beverage business than they have in other verticals. So why do you see that you haven't been able, say, Deliver on that in the Food and Beverage space. Why is that not a margin enhancer for you, so to say? Food and Beverage compared to Kompas, I think that's A lot related to size, I think and the purchasing power and so on that you have when you buy really, really large volumes. And Even though we are a fairly large player when it comes to food and beverage, we're much smaller Then the Compass and or Sodexo in that aspect. Just if you could also on the Equinor situation, if you could give some more color, do you have any idea why they didn't Say you renew the contract with you, is it price, quality, scope of the contract? Or have you got any more granularity on what really happens? Actually, so far, we don't have that detailed information. What we know is that we deliver A good service to Equinor today, and there are no complaints. And we have a very good cooperation together with So I think the future will show what's happening. Excellent. And when you look at the ongoing discussion for the production sites, is that an unchanged Contract or is there some sort of component like the Danish police that it might become a larger contract involving more sites? No. When it comes to the scope of the production sites, they are more or less the same as we see today. And finally on Equinor, when you're now obviously, you can plan quite a long way now into The future, knowing that you need to ramp down these contracts, what kind of, say, margin challenge or extra cost Do you see him maybe hitting your accounts, so to say, during this year due to the ramp down? Again, Somewhat difficult to have a firm view on that. What is happening right now is, of course, that the Norwegian operation are taking Really close look at the organization and so on in order to find the mitigating actions in order to defend the margins, of course. But I will not provide any individual guidance for Norwegian margins going forward. That's But if you look at it, you should be able to handle this in a good way even though the large scope of it. I think history has shown that we are quite good in handling changing situation. Of course, this is a A large part of the contract that is now lost, but we will do everything we can in order to mitigate that in In the best possible way. And also notice a small change in wording when you talk about the pipeline going from Strong to very strong, is that just semantics? Or is that how you also feel for looking at it at the present? We actually think it is very strong, and we actually think it looks a little bit stronger than it did 3, 4 months ago. There are several large opportunities, as Anna Karin mentioned, especially in Sweden and Denmark. And if you could just you found this acquisition target in Western Norway yesterday. Just if you could say detail a little how you See that fitting into the Norwegian structure and seems to be a very profitable little operation you found there. Yeah, Yes, absolutely. It's a well managed family owned company in Stavanger. And Stavanger, first of all, that's a very important area to be present and be strong within. So it strengthened our geographical footprint in Stavanger. And also, they are They have a very good track record within food and beverage, but in cleaning. And they work as single service providers. And we think that will also benefit our Norwegian organization in strengthening our single services within cleaning and food and beverage. Excellent. And do you still feel that there's a good pipeline of these kind of opportunities across the Nordics as well? Yes. As we mentioned, we I think we can position it like this that we have Started an M and A engine at Kors. So of course, we are looking for potential Targets. But as we used to say, we are quite picky when it comes to acquisitions. And we Our number one priority is to have focus on organic growth, but we know there are opportunities in the market and we try to find Of course. And when and work with them, of course. Excellent. One final one for me. I noticed your headline of organizational changes and focus, So on the service development, digitalization and so on. And Karin, I know that during this year, you have postponed a lot Due to COVID-nineteen, is this, say, a reacceleration of old programs? Or is it something new here? And what's really And ambition with these changes? Yes. I think it's a mix between Starting up some old initiatives that we postponed, but also some new initiatives. And many things of this is Actually connected to a new office situation, we really need to speed up In technological solution, innovation and digitalization, and we have a Strong pipeline of start ups that we are working together with, so make sure that we can provide our And when you look at digitalization opportunities Within your space, is that more of a top line driver or a margin driver, efficiency driver? Where do you find the opportunities? I don't think you should expect the digital solutions to be really a top line driver. The value is more related to the customer experience, the customer value, but it also creates a stickiness and, of course, in some aspects also in Efficiency impact from us, for example, using sensor technology and so on rather than making rounds with people in the buildings So have you been able to do any studies showing the advantage for a client that are, say, using digital Solution to a larger extent, how much that can increase the efficiency in the contract or something like that? I mean, we have several Good examples from different customer sites where we've been working with sensor technologies in order to help them optimize their office layout and office Size and so on. So there are some really good examples. And I think, yes, sensor technology becomes Less and less expensive. The sensors are now not that expensive. We see an opportunity to actually implement similar types of Solutions for other customers as well. And just a final one for me. Looking at The dividend and capital allocation policy of the company and so on, you're obviously having a super strong balance sheet after this Yes. And as you say, hopefully, there's a lot of acquisition opportunities out there. But even in that perspective, The dividend obviously is a good return, but you will even after that have a super strong balance sheet, way below the 3 times net debt to Yes. So how is the board reasoning here when they come with this kind of dividend decision and then say Balancing it against the financial target of just being below 3x net debt of EBITDA. I think the board, I mean, first of all, it was really important for us returning to dividend as soon as possible, As we said in the Q3 report, and we are returning to a level that is at the same level as we proposed this time last year that was then Drawn. And we think that, that creates a good balance of actually returning good dividends to the shareholders, but still leaving Enough firepower in the organizations to continue to look for acquisitions. Excellent. That sounds promising. Good luck in 2021. Thanks, Our next question is a follow-up question from Erik Possum from Nordea. Please go ahead. Your line is open. Yes. Thank you. Just a follow-up regarding I was thinking about cleaning services. And I have seen examples here in Stockholm, for instance, where Employee organizations or workplaces give their employees opportunities to have cleaning service at home, including in their employee agreement. Is this something that you can work on and is actually working on? Or is it too much of a like Geographic hassle around that? Yes. It is a good question, Erik. And of course, this is something we really try to deep into right now actually. But we do have respect for our business model. We have on-site service. That is our business model today. And if we should go over to bring our service into the homes, that is another kind of model. So if we should go that way, we need to be Quite cautious and know what we are doing, but we analyze that for the moment. And do you think it could be a decent margin in it if you have the scale, etcetera, in it despite The people are actually living quite vast geographical locations, I would say. As Anna Kori mentioned, it's a completely different business model, more of a route based model and so on. And I think it's Too early for us to assess the margin opportunities in that. We are, 1st of all, I mean, an on-site Organization, and that is our strategic focus. But of course, we will analyze and look if there is an opportunity or not and So the risks associated with it. Yes. All right. Thank you. Thanks, Eric. Thank you. Our next question is a follow-up question from Al Thagia from Hou Capital. Please go ahead. Your line is open. Yes. Sorry if you already touched on this, but in terms of the uncertainty among clients and work from home and all these things that you've already touched on, Are clients asking for more flexibility in contracts? And if so, does that make it harder for you Price then, correct it? I mean, that is an interesting question. And if we look at The ongoing bids right now in the pipeline, we haven't seen any major changes around that. But there is, of course, a lot of Discussions going on, but not that has materialized at this stage. And I think going back to what Anna Karin We are probably moving into a trial and error phase in many different aspects, both in terms of working from home, but perhaps also a little bit around the business model. So Ongoing discussions, many thoughts, but nothing that has really been seen in the ongoing processes as of today. Okay. I guess one might infer that it would be easier for the larger players rather than the mom and pop shops to allow for such flexibility in contracts. But anyway, thank you very much. Thanks. Thank you. We have no more questions from the line. I will hand it back to our speakers. Please go ahead with your closing comments. All right. So thank you very much from our side, and we'll make sure that we'll keep in touch. And some of you, we will talk to In the coming days. So thanks. Yes. And thank you for listening in, and take care.