Hello, welcome to the Hexagon Q4 Report 2019. Throughout the call, all participants will be in listen-only mode, and afterwards there will be a question and answer session. Today, I'm pleased to present Ola Rollén. Please go ahead with your meeting.
Thank you. Good morning, good afternoon, everyone, and welcome to this Q4 2019 interim report call. If we start on slide number four, overview of the fourth quarter 2019, we report an organic growth of -2%, but a recorded growth of +2%. We have two strong winners in the quarter, PP&M with 13% organic growth, and SI that came back to a good 7% organic growth. Geosystems recorded -2% organic growth and was negatively impacted by a general slowdown in some construction markets. Manufacturing Intelligence recorded -8% growth on the back of a slowdown in automotive and general manufacturing in China. One should also remember that it was a very strong finish for MI in the fourth quarter of 2018.
Its record earnings and margins this quarter, our gross margin is now 63.3%, up 1.1% over the corresponding period of last year, and our EBIT margin is 26.2%, which is 0.2% better than the fourth quarter of 2018. We benefited in the quarter in spite of the negative organic growth. We benefited from a favorable product mix and cost savings. Looking at slide five, it's just a reminder that the seasonality of the Hexagon group prevails. The fourth quarter is by far the strongest quarter in the year, and that happened this year as well. Moving on to slide six, that is an overview of the profit and loss statement for the fourth quarter, and we can see that we invoiced EUR 1,059 million in the quarter. That corresponds to an EBIT margin, at 26.2% and an earnings per share of EUR 0.54.
On slide seven, you have the full-year. We're now close to EUR 4 billion in sales and 25% EBIT margin. Looking at the cash flow for the quarter, the cash conversion in the fourth quarter was 99%, and we had a cash conversion of 93% for the full-year. A very good cash flow year indeed. If you look at slide nine, working capital to sales is now 12.1%. Moving on to the market development, and if we stay at slide 11 for a bit, this is usually quite rigid patterns, but we can see the impact of the slowdown in China, where China today represent 12% of group sales, whilst a year ago, it represented 15%. On the other hand, North America, led by United States, is now representing 32% of group sales, whilst last year it was 30%.
Just comparing U.S. to China, you can see that Hexagon's business is now significantly larger in the U.S. than it was a year ago, and we see a significant contraction in China. Slide 12, just an overview of the various regions. Eastern Europe, Middle East and Africa grew above 8%, whilst at the bottom we see Western Europe and China with negative growth in the quarter. For your review later, we have slide 13, the so-called arrow slide, where you can see detailed trends in various segments and geographic regions. Moving on to EMEA, slide 14. As we stated, Western Europe recorded -2% organic growth, and it was the automotive and engineering sector in Germany that slowed down.
The U.K. was weak in general in the fourth quarter, but it was primarily the construction sector that suffered, and it was probably to do with the Brexit process. Spain saw a weak quarter whilst positives were Russia, Middle East and Africa, France, and the construction sector in Germany. America's market trends, slide 15. We saw good growth from the construction sector, from our geospatial business and from public safety in the U.S. Brazil and South America had strong growth in the quarter as well. The negative areas were Canada, where the natural resources sector, oil and gas, mining, had tough comparatives to a fairly strong Q4 in 2018. We also saw a slowdown in the automotive sector in Mexico in the quarter. Slide 16, Asia market trends. Positive markets, India came back to growth, we have a good outlook for 2020.
Korea had a good quarter as well, and so did Malaysia, whilst China continued to report negative growth. We saw an improvement in the electronic sector in China in the quarter, but we saw a weakening auto sector in the quarter. Southeast Asia was relatively weak in the quarter, but it's due to very strong comparatives in the fourth quarter of 2018. That was the markets. If we then move to the reporting segments, we start on Slide 18 with Industrial Enterprise Solutions. We saw organic growth of minus 4%, sales of EUR 544 million with an EBIT margin of 27.2%, which is slightly better than the fourth quarter of last year. Within Industrial Enterprise Solutions, we see MI contracting by 8%, and it's to do with the Chinese decline in automotive and general manufacturing.
PP&M, on the other hand, saw a turn back to growth for its design and asset management software products, especially MI was strong in the quarter. Moving to Geospatial Enterprise Solutions, slide 19, we report an organic growth of -1%, where we see -2% from Geosystems. It's the weakness in certain construction markets in Europe and Asia. We also saw accelerated growth from SI, where SI has come back from its restructuring and our new product, the OnCall platform, is gaining traction and building a solid pipeline in the market. Autonomy and Positioning, previously called Positioning Intelligence, report -9% organic growth. That is weaker demand in automotive as well. As a group, we report EUR 515 million with 26.1% EBIT margin in Geospatial. Slide 20, growth margin for the group improved to 63% for the rolling 12 months, 63.3% for the quarter.
Operating margin on slide 21 is now 25%. It was 26.2% for the quarter. Orders and product releases and acquisitions in the quarter, slide 23. We announced that we've acquired a company called Volume Graphics. Volume Graphics is the leader in the development of high-end analysis and visualization computer tomography software. As more and more industries embrace additive manufacturing, this is the future for metrology software and our smart factory solutions. We're proud to announce that Metropolitan Police selected HxGN OnCall, our new product within the public safety field, as their standard platform for dispatch solutions. Metropolitan Police is a huge organization. You must be able to cope with 7 million calls annually in 250 languages. It keeps more than 8 million residents in central London safe. slide 25.
We're also proud that we're partnering with Tetra Pak and expand our PP&M product offering into the food service sector, where they're going to use our virtual design and visualization tools throughout their entire plants. Slide 26. We also got an order from the Bay Area Rapid Transit, that is the public transportation company of the San Francisco Peninsula. They're going to start using EcoSys for managing project portfolios and maintain project controls. Slide 27. We're now launching a new hardware platform called Leitz Reference BX. This is a platform that is designed to be able to cope with the curvature of measured components like smartphone screens or intricate components such as fan and turbine blades and blisks for the aerospace industry. Slide 28.
We have an interesting project with HOK, which is a global architecture firm. It's between Geosystems and PP&M, where we're going to do a seamless integration between BIM and scan, so that you can scan assets or brownfield structures and automatically import them into your BIM model. Slide 39. We're also working with the European Space Agency to create an autonomous space observation program used for Earth observation capacities. We're going to use our computer-aided engineering, i.e., simulation solutions to do so. Slide 30. An interesting collaboration with General Motors, where General Motors is developing autonomous driving, and we're going to do a combination of our sensor and scanning capabilities and then merging that into our VTD simulation software, where you can simulate autonomous driving from live sensors on a real car. Slide 31.
Grande Prairie Fire is going to implement the HxGN OnCall dispatch solution. Grande Prairie is located in Northwestern Alberta, Canada. It's the largest city in this area. A good reference for us launching the new product. Slide 32. Bundeswehr is going to use Hexagon's software, geospatial information technology software portfolio to provide geospatial information to the German Defense Organization. It's the Army, the Air Force, the Navy, and the Medical Services. Slide 33. Smart water infrastructure using our geospatial solutions. AQUASIS is a Portuguese company. They are implementing our software portfolio to run ongoing and future projects to improve the efficiency and reduce the cost for water distribution, sewage, and wastewater treatment. Slide 34. It's becoming more and more important with mine safety. This quarter, we got several orders around mining safety. You can see the problem within the mine from that picture.
Anglo American at two locations used our HxGN MineProtect, they installed it. Bengalla Mining Company in New South Wales, Australia, also installed our HxGN MineProtect collision avoidance system into more than 180 vehicles in their mine. Slide 35, finally. Mueller Water Products is now using our IoT platform, Xalt, to connect machines and sensors in their system to monitor their water facilities. Finally, slide 37. The board of directors are proposing a dividend of EUR 0.62 for the year 2019, that is an increase of 5%. The dividend will be paid in EUR or SEK. Summary. If we summarize the quarter, we report 2% recorded growth and -2% organic growth. We've seen solid return to growth for PP&M, 13% in the quarter, SI, 7% in the quarter. Manufacturing Intelligence, -8%, Geosystems, -2%.
All in all, it's still a record earnings quarter and a record profitability quarter with a strong product mix and strong cash flow to back it up. With that, I'm finished with my presentation. We're now ready to answer any questions there might be on the call. Thank you.
Thank you. If you wish to ask a question, please press zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. There will be a brief pause while questions are being registered. The first question we have is from the line of Mr. Adam Wood from Morgan Stanley. Please go ahead.
Hi, good morning, thanks for taking the question. I've got two, please. Just first of all, on the management change that was announced during the quarter, could you maybe just give us a little bit of insight into why those changes were made and what benefits you hope to come from that? Maybe for you personally, whether that involves any changes in terms of the role that you have in the company and your responsibilities. Secondly, obviously with the coronavirus ongoing in China, could you maybe just talk a little bit about the actual impact on the business on the grounds in terms of travel restrictions, how it makes business harder to do with people coming in and out of the country, or whether there's less disruption because most of the business is more domestic anyway. Just some insight into what's happening would be very helpful.
Thank you.
Thank you. We start with the management change, it's two things we wanted to accomplish. We need to do more coordination because we see a greater emphasis to combine various products and technologies from various divisions. With this reorganization, we achieve that. It's also fair to say that it's a rejuvenation of the divisional management within Hexagon, where, if you so wish, the next generation of general managers is taking another step on the career ladder. Regarding the coronavirus, as you know, they prolonged the Chinese New Year till the 10th of February, and that is what we know now. We have 2,700 employees in China and there are travel restrictions, and there might be restrictions in the logistics systems in China going forward.
For Hexagon, March is the most important month in the quarter where we will see whether we have restrictions in logistics, i.e., delivering products to customers or not. It's definitely a more difficult trading environment than without the virus, obviously.
Thank you.
Thanks.
The next question we have is from the line of Daniel from Handelsbanken. Please go ahead, sir.
Thank you, [audio distortion] congratulations. Good mix, good cash flow, and thank you for taking my question. I would like to just continue on China, if you do see any, except for the domestic issues and the logistic system impact, et cetera, should we be afraid of any indirect effects from components into other products that you have that will be impacting your component constraints or something? Have you seen anything of that?
There is a risk of an indirect impact. We try to address it. We are typically quite regionalized in our supply chain. We're not expecting a big impact, but we're looking for certain components for alternate solutions. It's way too early in the quarter to say if this is going to have an impact or not.
Perfect. Also, if I may ask you on the BLK2GO and BLK247, you were right that you expect a gradual uptake quarter by quarter. We have seen some initial months here of the market. To compare this with the RTC360 or previous products in the market, would you expect a similar ramp as you've seen before on these?
BLK2GO is fairly similar to BLK360 or RTC360. Similar ramp up. When it comes to the BLK247, that's a completely new market where we're collaborating with security and safety specialists to find applications where it's of benefit to the end user to use the BLK247. That's going to be a slower penetration into, as I said, a completely new market for Hexagon.
Okay. Finally from me on Western Europe, it was a down year-over-year in all segments except for power, energy, and mining. That's due to, I think, U.K. and Germany and Spain and so on.
Have you any view on the potential uptake here in 2020, or we should expect it to continue to be weak, for example, safe to say, I think?
It's hard to describe what we believe. Sitting in the beginning of a year, but we do think that we're going to see a gradual improvement in our organic growth over the coming quarters of 2020. That goes for more or less all regions.
Great. Thank you.
Thanks.
Thank you. The next question we have is from Alexander Virgo from Bank of America. Please go ahead, sir.
Thanks very much. Morning, all. I wondered if you could do a couple little detail answers, I suppose. In China, you called out general engineering and auto as the drag. Obviously last year it was more about electronics. I wondered if you could talk a little bit more around the color and the trends, because I think that if we put coronavirus to one side for a second, some of your peers and some of the other companies that we cover have at least sounded a little bit more positive into the end of the year. I'm just trying to understand a little bit more about the dynamics in China. I wondered also if you could talk a little bit about what's driving the 13% in PP&M in a little bit more detail.
You mentioned EcoSys a couple of times, and I know that that's been gaining a lot of traction as you enter new markets there. Obviously, the big part of that business historically has been oil and gas, and that's the bit that you've been diversifying away from. I wondered if you could just help us understand that 13 a little bit more detail as well. Thank you.
China, we're cautiously optimistic about China as well. The fourth quarter was a very negative quarter for us in China. This time around, it wasn't electronics that shrunk, but we saw a significant slowdown in the general engineering and auto sector. Looking forward, Q1 is probably the last tough quarter where it's hard to say what's going to happen due to the coronavirus. Going into mid-2020, we actually expect the China market to look significantly better for us than it has over the past three quarters. Moving on to PP&M, what we saw in the fourth quarter, we saw continuous growth from the initiatives that we've initiated, branching out from oil and gas. We also saw a strong return to growth for our design portfolio, i.e. the core product, which is targeting oil and gas.
Okay. That's super helpful. Thank you.
Thanks.
Thank you. The next question we have is from Erik Golrang from SEB. Please go ahead, sir.
Thank you. I have three questions. The first one is on another one on PP&M, and if there is anything in terms of sort of major contract there that could be difficult to lap in Q4 of this year, or if it's a reasonably clean quarter. The second question on continuing on BLK2GO and the potential there, what should we think about as the user base here? Is that the sort of RTC360 or BLK360, or what's the potential buyers here? Is the price point a limiting factor in any way? The third question on customer or sort of energy mix in Manufacturing Intelligence on the auto side, is there a difference for you in terms of manufacturing of EVs as compared to an R&D of EVs as compared to combustion engine vehicles? Thank you. Hello?
Ladies and gentlemen, please stand by. It appears that the speaker line has disconnected. Just give us one moment. We'll have this reconnected. Erik, just please stay on line. Your line is still open. I'm just going to mute you for now. Just one moment, sir. Once again, ladies and gentlemen, please stand by. The call will resume shortly.
Sorry, Erik Golrang.
Sorry for interrupting. Ola, are you back online?
Hello.
Hi. I'll just put you back to the question. Just a moment. Erik, I'm just unmuting you now. Please go ahead, Erik, and re-ask your question, if possible. Thank you.
Sorry, Erik. I think I got your questions, but I didn't mean to hang up on you.
I didn't get your answers.
No, no. I didn't mean to hang up on you. So sorry. The first question was PP&M, and it's a very clean quarter. We don't have any major contracts, which actually makes the growth even more impressive. If we go back to the target audience for the BLK2GO, the user base, you could say, is overlapping with BLK360, where we're targeting similar clients. Longer term, BLK360 is a stationary product, while this is a mobile product, and you're going to be able to acquire data much faster and much more efficient with the BLK2GO technology. It should have a much, much bigger target audience than the BLK360 over time. Because people can move.
At a higher price point as well?
Yeah. It's a slightly higher price point.
Okay.
You could say the 360 will be the entry version, and most applications might be able to make do with 360, but we're going to find several customers that are willing to upgrade to the BLK2GO. Finally, electric vehicles, it doesn't really matter that much for Hexagon MI whether the manufacturer is choosing electric power over combustion.
Very good. Thank you.
Thanks.
Thank you. The next question we have is from Mikael Laséen, I think from Carnegie. Please go ahead, sir.
Yes. Hi. I got a question regarding SI, and the HxGN OnCall product. Can you talk about the pipeline and demand for that, and revenue recognition from the London contract that you got?
If we start with the pipeline, and this is a cloud-based product as opposed to a physical installation with the predecessor of OnCall. It's a significant improvement from an installation and cost point of view, and also maintenance point of view. The pipeline is building up. I can't give you an exact number on the pipeline, but we are looking at some good growth in the quarters to come for SI. Could you repeat your question on Metropolitan Police? Because I couldn't hear you.
Okay. Sorry. Yes. It's how much revenue you got from that contract already now, and how much is remaining in 2020?
It's only EUR 70K in Q4. It's a very long project and a long contract, and it's a big contract, but I don't think we disclosed the size of the contract.
Okay. It's an OnCall product?
Yeah. It's OnCall.
Okay. Just the Scan-to-BIM projects looks interesting. Is this a product solution that is ready to market right now, or do you need to do more work on it?
It is a project with the customer where we invoice the work we do, and it's not 100% complete, but it's a fairly complete solution where we're going to be able to use it and recycle it in new contracts going forward.
Okay, great. I got it. A final one, if I may. Just curious about the IoT Xalt customer, Mueller, that you announced. Is that the first external Xalt framework customer that you have? That we can expect this to continue, can you just explain that some more in detail, please?
We have a small external customer base for Xalt. It's not material for the Hexagon Group, and it's not our key focus either. Some of our customers have been intrigued by the capability of Xalt, and then we've sold them Xalt, and they've used it not in combination with our product, but as a standard IoT platform.
Okay. Thank you.
It's not something we're pushing, but if we can sell it, we will. Good. Thanks.
Yeah, thanks. That's all from me.
Thank you. Thank you. The next question we have is from James Goodman, from Barclays. Please go ahead, James.
Morning, Ola. Thank you. Just to follow up quickly to PP&M. Did you characterize that primarily as a market growth improvement there, or is there some meaningful competitive elements or improvements of the products that you think that's causing the acceleration? Just interested in any commentary you're seeing in the customer base around the current oil price trend. Appreciate it's far too early to see any actual CAPEX impact from that, but just given a bit of the volatility there. Just secondly, thinking back to when the electronics issues hit you very quickly brought out a cost program there, and that's benefited your margins. It just feels like now that issue is becoming behind you, but you've seen some broader weaknesses you've explained, and I wondered if you're considering any further cost action or if there's potential for that. Thank you.
We start with the cost program. No, we have no further plans to do any programs right now. You never know, of course, what's going to happen in the global economy, and there might be a need to revisit our cost structure. I think with the new organization we've launched, we're also going to focus from the newly installed COO. One of his tasks is going to be to revisit and look at our legal structure and try to cut cost in administration and general management and back office activities. I think it's going to be more of an ongoing process to cut cost going forward over the next 12 months. Regarding PP&M, we've signed contracts with, for us, new markets. It's not exactly market share gain, it's just that we're introducing the PP&M technology to new markets, and Tetra Pak is a good example of that.
It's also fair to say that our core customer base had more demand in the fourth quarter. There is a need to reinvest in capacity in the oil and gas industry, and that is really regardless of where the oil price is.
Okay. Thank you.
Thanks.
Thank you. The next question we have is from Toby Ogg from JP Morgan. Please go ahead, sir.
Yeah. Hi, thank you for taking the question. Just firstly on Geosystems specifically, I remember at Q3 you were calling out construction weakness, and you clearly had the full impact of the product headwind there. If we look at Q4 specifically, any indication on the product contribution? Have you seen any incremental weakness or improvement in the construction sector specifically since Q3? Just secondly on China again, have you seen any change versus sort of six months ago in the behavior or the interaction that you're having with these OEM clients in the region? Just any kind of indication around visibility on perhaps that kind of return to growth would be helpful. Thank you.
Geosystems, we don't have much product contribution from new products, which I assume is what you're alluding to, in the fourth quarter, because BLK2GO, which was launched in the fourth quarter, had very little impact on the numbers in Q4. That's probably something to look forward to and watch out for in Q1 and onwards. Regarding China, I would characterize it like this, that the OEMs are probably more happy about 2020 than they were with 2019.
That's great. Thank you.
Thanks.
Thank you. The next question we have is from Viktor Högberg from Danske Bank. Please go ahead.
Okay, good morning. Two questions from me. Given the aerospace segment for you has been quite good in Q4, what do you see any implications from Boeing or fallout from Boeing in the U.S. maybe closing down or halting production?
It's been fairly flattish. We haven't really seen any detrimental effects from the 737 MAX.
Okay
situation. Yeah, we have to watch it quarter by quarter, I assume.
I guess you're talking about you didn't see it in Q4.
No, we did not see anything in Q4.
Okay. Given the backdrop of a slowdown in construction and a new product in Geosystems, the BLK2GO, do you think that launch could offset the slowdown already in Q1, or is it gradually throughout the year?
I think there are several reasons, and you need to be quite market specific when you talk about the construction slowdown. We have certain reasons for the Chinese slowdown. We've seen a slowdown in the U.K. related to our rental business, and I think that is something that very quickly could come back given the new certainty that the Brexit situation is giving the U.K. construction market. A new product obviously always helps growing.
Okay. One last question. On automotive, I think I recall that you said in the Q3 call that you were hoping or that you were guessing for, you could see a turn in automotive already by the end of this year, 2020, or mid almost. Do you still see that, or what do you see in terms of automotive, which was low in Q4?
Yeah, we see somewhat more positive outlook for the automotive sector going into 2020.
Is that in China or globally or?
Automotive is a global segment, so they usually interact. One trend is spread throughout the system, so to say.
Okay. Interesting. That's it for me. Thanks.
Thanks.
Thank you. The next question we have is from Wasi Rizvi from RBC Capital Markets. Please go ahead.
Hi. Morning. Just a couple left from me. If I could start on Autonomy & Positioning, the main change. Just to be clear on that, how much of that division is now auto? Can you help us understand the revenue drivers from the auto side? How much is subscriptions or one-off sales of software and hardware? Just help me understand the dynamics in that segment. The last one that I had left was just, can we have an update on HxGN SMART Build, and is that ready for commercial launch or has that launched already? How's that going?
We start with Autonomy & Positioning. I would say around 30% is auto. Why it's down is simply that we've seen a cutback in funding around certain autonomous driving projects. It's starting to look a little better in that sector as well now going into 2020. Yes, 2020 is the year when we launch HxGN SMART Build. We're slightly delayed with that launch.
Okay. It hasn't launched yet, but it will be some time during this year?
Yeah.
Have you got launch customers lined up? I know it was a trial with Skanska originally. Have you got more customers lined up for the launch, or will it be you'll launch and then see where you are with customers?
We will see. We hopefully have some customers that are willing to jump on the bandwagon.
Got it. Thanks.
Thanks.
Thank you. The next question we have is from Alex Tout from Deutsche Bank. Please go ahead.
Yeah. Hi. Thanks for taking the question. Just on construction, I didn't hear commentary specifically on the U.S. market so far. If you could just talk about the U.S. market, the dynamics in infrastructure versus non-residential, whether those are divergent at all, and if you have seen a slowdown there, whether you think that's due to the election coming up, early signs of that, or just a lull, and you've seen signs of a pickup since the end of the quarter, and a follow-up. If you could just go for that one first. Thanks.
No, we haven't seen any impact from the upcoming election. The U.S. construction market was all right. What we saw in infrastructure and construction, if you go to slide 13 in our presentation package, we also include other adjacent industries in Canada and Mexico. Our pure construction exposure in the U.S. was not affected by any pre-election turbulence, if you so wish.
Great. Then just thinking of the FY 2021 margin target, the 27%, I think that implies, if we assume a normalization of growth over the next couple of years, 40% plus incremental margins from here to get to that. I think the five-year average is about 32%. What would need to happen to see that real spike in incremental margins over the next couple of years at this point?
You need to see a continuous improvement in the growth margin.
Is there much further to go? We had a strong year or relatively strong year in PP&M and safety and infrastructure, certainly in the latter half of the year. If we assume that the lower-margin businesses come back a bit in the next couple of years, I guess that would be something of a gross margin headwind.
No, not necessarily. It depends on the product mix. For example, within SI, we have a much greater gross margin with OnCall than the predecessor.
Right. Interesting. What sort of proportion of your installed base around SI do you think could realistically migrate on a two year view?
I don't think it's the installed base. I think it's new and upcoming projects like Metropolitan Police in London, for example. It takes time to move an installed base of that nature. There is always new projects, and we're focusing on the new projects.
Great. Thanks very much.
Thanks.
Thank you. As a reminder, ladies and gentlemen, if you wish to ask a question, please press zero then one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. The next question we have is from the line of Philip Ramqvist from Sveriges Radio. Please go ahead.
Yes. Hi, thank you. You mentioned that the coronavirus might impact your supply chain. What alternative measures are you looking at?
The only thing we can look for is other suppliers outside of China. That's exactly what we do. We have a significant business in China as well, and therefore, that's going to be affected if this continues.
You aren't looking at taking production back home to Sweden?
We don't have any production in Sweden. It's going to be hard to take it there.
Okay, great. Thank you.
Thank you.
Thank you, Philip. We have a final follow-up question from Daniel, from Handelsbanken. Please go ahead, sir.
Thank you. Just a follow-up. A question on the one-off charges of EUR 26.2 million. Can you give a portal how much was overlapping technologies, transaction costs, and integration costs of that number?
I'm sorry, your line is very weak.
Okay. Yes, of course. Can you hear me now?
Yeah, much better.
Yeah. Perfect. You have the one-off cost in the quarter, EUR 26.2 million. I just wonder if you could give a ballpark number or percentage, how much is overlapping technologies, transaction cost, and integration cost of that?
Yeah. The lion's share is overlapping technologies, and the second largest is integration cost.
Okay. Thank you. Also, do I need to wait for the annual report to know the net impact from in the P&L on the capitalized development expenses minus the amortization of the same? If you compare with 2018, for example.
Yeah
the net effect, if you have that for.
No, you have to wait for the annual report.
Okay. That's good. I will look forward to that. Thank you.
It's a great report.
Thank you, Daniel. Ladies and gentlemen, I'd like to hand back to your chairperson today, Ola Rollén, for any final comments. Thank you.
No, there are no more comments from our side. We thank you for calling in, and we'll do this again next quarter. Thanks.
Thank you. Ladies and gentlemen, that concludes your call for today. We thank you very much for joining and ask that you disconnect your lines. Have a great morning or afternoon ahead.