Earnings Call: Q1 2018

May 15, 2018

Ladies and gentlemen, welcome to the Host Finance Q1 Report 2018. Today, I'm pleased to present CEO, Claus Anders Niesen CFO, Christa Johansen and Head of Investor Relations, Michele Fischer. For the first part of this call, all participants will be in a listen only mode and afterwards there will be a question and answer session. Speakers, please begin. Thank you and a very good morning to all of you. It's the Stockholm office in Hoistreinen. There is a blue sky outside and the sun up above, so a very nice day in Sweden, of course. This is Klaus Ondersiesten, the CEO. Today, with me in the office, I got a couple of colleagues. One is our CFO. Good morning. This is Joassal. And Michel Fuscher, Head of Investor Relations. Good morning. Yes. So this is the three people that you will talk to today or listen to. But before we start with today's presentation, I thought it could be useful just to quickly introduce ourselves because we are new to you at least in our current roles. So, name is Kansal Ryszewsden. I am sixty days into the job now. Prior to joining Hoist Finance, I was CEO in Lindorf, one of our competitors of Hoist, now joined with Interim, as I'm sure you all are very well. Before joining Lindorf, I had more almost thirty years of experience in different multinationals, fifteen years as CFO and fifteen years as CEO. So different industries also been head of a retail bank in Norway. So that's really me. Thank you, Klasann Lisch. Kristi here. I am, of course, very excited to take on the role as CFO for Hoist Finance. I've been with the company for more than four years. So I know the company very well and I feel strongly committed to our mission. And I look forward to working together with our management team in executing on our strategy. Very good. So let's start then. We are, of course, very happy to present the Q1 numbers for you. And you see the agenda, I think it's at Page number three. So even though it's still early days for me, sixty days into the job and I haven't even utilized my one hundred day CEO program period, still, I thought it could be useful to share a few reflections at least on the strategy. We will definitely revert later into the fall with a full Capital Markets Day, but anyways, a few initial observations around directional strategy might be useful for you. Definitely, also spend time with the numbers and Kristian will take us through all the details and we will round things off with a bit of questions and answers. So, yes, six days into the job. And I've been able to see all our markets, meet all our employees. I met with several clients. And to share with you a couple of observations then, first of all, I think we have really great people in Horst Finance that makes them really happy and comfortable. There is lots of enthusiasm, lots of challenge and that's great. I also think we have a very good approach to collection and having an amicable approach, holistic approach where we put the best interests to our customers first, I think, is very important. So really happy to see that in all markets. But I also see things that we can do. And of course, that upside potential, if you like, is definitely embedded in the way we think about strategy. On page number five, we have a couple of sort of illustrations that I think are very important. And when I meet with clients and employees, find it useful actually to think about our purpose and remind ourselves what our role is in society at large. And I think definitely the starting point here is credit. We don't think of it very often, but almost behind every transaction out there, there is credit involved somehow. And we all know, of course, that sometimes people actually default on their credit, on their loans. We are the specialists out there who are there to find the solution, a way forward, a way ahead for people. So if I were to summarize, I would say that for society, in a way, we are here to ensure that credit is available and actually affordable. So that's one important element. And secondly, for our clients, we are here to ensure they are being repaid. If they wouldn't be repaid, why would they offer credit and at what cost? So that's definitely important. But perhaps even more importantly, I find the fact that we engage with so many people every day, talking on the phone, interacting with new people and finding a way forward for them in a place and a time where they struggle with non performing loans, think, is extremely meaningful. Helping people to get by and to get on with their lives is actually something I take a lot of pride in and I think we should all do in terms of what we do as a company. And then moving on then to the next page. We have, based on this, made one change in sort of the mission value statements because we used to have a vision in Ords Finance that we were the debt restructuring partner in Europe, but that doesn't really capture the very essence of what we do. So that's more related to our position in the industry. So we have now as a team decided that our new vision for Hoist Finance is to helping people keep their commitments. And I think that really captures, again, very essence, the very core of what we do as a company. So I take a lot of pride in that in actually finding a way forward. Our position is definitely the same. It is to be a trusted partner for the financial institutions in Europe. We do focus on financial institutions, the big banks in Europe, that's really what we do the best. Our mission is your trust, that's been sort of the payoff for quite some time. And the values is based on trust, transparency, results, uniqueness, skills and teamwork. So definitely, that is something that we keep close to our hearts and minds. Based on this ambition, we and going into the work that we did, have done over the last few weeks now related to strategy, our starting point was what we observe and see happening in the marketplace in our industry And that's on page number seven. And we do see three important trends. First one is growth, second is consolidation and the third is the market maturation that we see. So quickly then on growth, we definitely see good growth in the years to come, estimated here to be double digit and happy to see that, of course. The growth in different asset classes vary and we see that new asset classes is growing faster than the old traditional core for hoist finance, which has been unsecured consumer. So that also is important for us to have in mind giving and we are outlining our strategy. We definitely see market consolidation. I wouldn't say every week, but at least more or less every quarter, there is smaller and larger deals happening in the industry. And I think that today, we have probably around ten, fifteen names that have a pan European presence out there. But five years from now, that list is going to be significantly shorter. Would guess that five years from now, probably around five names, more than 10, definitely. And we want to be part of this consolidation. We want to be one of the consolidators in the marketplace. Point number three here is market maturation. And I think you all agree and probably have heard also other companies saying that The UK is one of the more mature markets in Europe and that's definitely how we see it too. But the other markets are maturing quite rapidly. And I think we, this time, included Spain as one of the more mature markets actually. And I think that's fine. I happen to like mature markets quite a lot. Those markets are quite mature, quite rational. We know the competitors. They behave in a way which we understand And that's all good. Sellers are typically quite sophisticated too. So in a way, prices up, but also risks down. So that's something we kind of appreciate. And that just means that the ordinary forces are at play being most effective, most efficient, having a value proposition that works in those markets. So we like mature markets. That brings me to the next page, Page number eight, and that just briefly talks about our history as a company. So we go back to 1994. We quite early on got our credit market license. We have been able over the years to diversify our funding. We did the listing in 2015, very important milestone in the life of the company. And now looking ahead, for us, I clearly see that size matters in individual markets. So it doesn't want to try to take the leading position in the prioritized markets and benefit from scale in the markets. We set ourselves out of ambition to be industry leader in terms of operational efficiency and digitalization, that's a clear and important trend, an ambition for us. And last but not least, we can capitalize on having the industry leading funding costs. We definitely have lower costs than all of our peers. And that brings me then to slide number nine, which is now the cornerstones of our strategy. You can see the hexagon there and we will come back in more detail in the fall and outline to you, I think, in more specifically for the strategy, but a few key words, a few key takeaways perhaps now. So on market leadership, I said that size matters and I think it's quite clear for us that the synergies are much stronger and more important within the markets than across the markets. So addressing the six largest markets in Europe, they actually address 80% of the market potential. So for us, the prioritized markets would be The UK, Italy, Germany, Poland, France and Spain because those are the largest markets in Europe. And again, we can address 80% of the potential in the market by being relevant and large in those markets. We are also quite so we are focusing on not few markets rather than many. We also specialize. We specialize for financial institutions. We don't do retail. We don't do utilities and telcos. We are regulated as a bank. We understand banks. We partner up with banks. So it makes a lot of sense for us to be specialized. And as the industry matures and becomes more sophisticated and more professional, more and more is related to content. We need to move away from just talking about data to talking about knowledge. And we want to put our knowledge to use and and therefore to be more effective and efficient competitors. Clearly, we're also being more digital. I mean, our industry hasn't been at least leading within the financial sector, but we can definitely step up. And also just by the fact that we have a more focused model should help us in achieving our ambition in digital. I mentioned that we have unique funding. We have a very robust balance sheet. Christian will talk more to the balance sheet later. And having a cost of funding, which is two percentage points lower than the peer average, I think, us a unique position in terms of having competitive advantage. And then with the OneHoistHinance initiative, we are taking important steps now to simplify our organization to work in a more lean and effective way and to harmonize our processes across markets and hence becoming more effective and more efficient. So that was just for you to get a glimpse under the hood and to understand a bit more around our thinking and strategy and then you know what to expect also when you see us again in person in our Capital Markets Day. So on the next page, we will summarize the first quarter and we are quite pleased with the growth in this quarter. The Q1 portfolio acquisitions was the strongest Q1 ever for Horst Finance and we saw 48% year over year growth. And the last twelve months portfolio growth was now is now 27%, so good growth in the quarter. We have taken cautious and prudent and disciplined steps into new asset classes. We have knowledge, we have skills in several asset classes already. It's not like it's totally new territory. But having both performing and non performing mortgage portfolios in The UK, for instance, just demonstrates that we have the skills and we are building those skills internally. In terms of the financial performance, our total operating income ended at SEK684 million, which is a growth of 13%. The underlying profit before tax grew by 8%, so if you adjust for a performance fee that we had in the first quarter twenty seventeen. So 13% top line growth and 8% growth on the profit for tax line and then return on equity at 18%. Also very happy, I would say, with collection performance, so 108%, so significant overperformance this quarter. And I think this is actually the best number ever for the company. So that's good. Outlook, we do see a very positive market out there. There is a healthy pipeline. There are deals to be made. And for us, becoming more digital and more effective and efficient is definitely our top of our agenda. So growth, number one. And number two will be then becoming more efficient and effective. So with that, I think I leave it to Krister to take us through details in the quarter. So over to you on the financial update, Kristian. Thank you, Klas Handelsch. And starting on Page 11, before turning to the financial development of the first quarter, I'd like to touch upon our new segment reporting and our adaptation to new reporting standards. Turning to page 12. As communicated, we have implemented a new organization in Horst Finance, and this organization is based on both function and country. And since internal steering has been revised, there is also a need to update the external segment reporting, which was based on regions. The new segment reporting is based on country, and we will, in external presentation, group the smaller segments into one. In practice, this means that we will report financials for The UK, Italy, Germany and Poland separately. And this will be presented together with the group segment containing Spain, France, Belgium, The Netherlands and Greece. In addition to this, we will present a sixth segment, Central Functions, which is very similar to the corresponding segment in previous years. This segment also contains our treasury function and our funding costs, and those funding costs are then allocated to the other segments through our internal funds transfer pricing model. The net of allocated and actual funding costs will thus end up as part of total operating income in the segment's central functions. With that said, on our segment reporting, I would like to turn to Page 13 to describe our adaptation to the new reporting standards. Before going into detail, let's reiterate our communication in the year end report. Adaptation to new reporting standards does not have any significant impact on our balance sheet or on our capital adequacy, neither does it change our expected profitability going forward. However, as you may have seen in our previous analyst call, is also available on our website, the adaptation has led to adjustments in how we present the income statement. New structure is aligned with IFRS nine and it is also aligned with the way we, as a regulated financial institution, present our statutory accounts. Consequently, we will no longer present a separate operating income statement. With that said, I would like to make a few more detailed comments on the new structure. Amounts previously recorded on the line net revenue from acquired loan portfolios will now be split into two new lines. The first line is interest income from acquired loan portfolios, which is based on the effective interest rate. The effective interest rate is determined at the acquisition of the portfolio and is based on the expected future cash flows of the portfolio. This line is not affected by revaluations nor is it affected by shortfall or excess collections versus expectations. The second line is impairment gains and losses. And on this line, over and underperformance as well as revaluation is reported. For the first quarter of twenty eighteen, impairment gains and losses amounted to SEK103 million, of which SEK99 million is the result of collections coming in well ahead of projections for the period. As Klaus Anders mentioned, this corresponds to a collection performance of 108%. The remaining part of impairment gains and losses, which amounted to SEK4 million is the net effect of changes to future collection projections. These SEK4 million are what we would previously refer to as revaluations. It might be worthwhile pointing out that since previous periods are not restated, comparing net interest income with the previous year, it is not relevant. Net operating income, however, is a like for like comparison and so is the expense side. As a final comment, please note that in our quarterly report, we provide a bridge to EBIT margin, which is still one of our financial targets. With that, I'd like to take you through the first quarter's financial development. Turning to page number 14. Starting with net operating income, we show a healthy increase of 13% year on year. The performance is driven by growth in acquired loan portfolios as well as the strong collection performance described on the previous page. Total operating expenses have increased by a similar rate and this level is elevated by a few short term circumstances combined with a strategic agenda which we have outlined earlier in this call. I will get back to the cost development in more detail on the next page. I should mention already at this point that the weakening of the Swedish krona against our key currencies, euro, sterling and zloty has inflated both income, cost and balance sheet items by some 4% to 5%. Net operating profit amounted to SEK170 million, which corresponds to an increase of 8%. And as previously mentioned, looking at profits from participation in joint ventures, these have decreased compared to the same period last year, the main reason being that in Q1 twenty seventeen we received a performance fee based on our solid work in aiding the Bank of Greece. As a consequence, profit before tax is unchanged compared to the same period last year, but adjusting for this performance fee, profit before tax is up nearly 8%. Return on equity of 18% in the first quarter is somewhat below our target of 20%. Acquisitions in Q1, which is normally a slow quarter, was strong and amounted to SEK904 million compared to SEK611 million in the same period last year. When combined with the mentioned FX movement, this translates into a portfolio growth of 27% over the last twelve months, taking us up to a carrying value on acquired loan portfolios of billion. I'd now like to turn to Slide 15 and discuss cost and operational efficiency development in more detail. As Klaus Anders outlined in the beginning, our focus going forward is growth and operational efficiency. As shown on the previous page, total expenses increased by 15%, of which a third is the result of SEK depreciation. Starting with collection cost, on an FX adjusted basis, two current circumstances stand out. Number one, collection performance has been strong and this is in itself a cost driver since some costs vary with collection. Number two, legal collection activities, which is part of collection cost, was above recent average. This is largely due to the regulatory changes in the Polish market. And to adapt to these changes, we have worked through our back book and increased our legal activities over the last three quarters. This particular risk mitigating effort is now nearing its end. When it comes to personnel and administrative expenses, the FX adjusted increase should instead be understood in the context of two strategic considerations. Firstly, this is in part driven by our decision to expand into new asset classes and we are indeed investing into people and routines to capture such growth opportunities. The recently acquired performing loan portfolio in The UK gives us comfort that this will indeed pay off. Secondly, the cost increase is also driven by our decision to accelerate transformation and we are ramping up our competence to become the digital leader of our industry. As part of this, we are also reviewing some of our past investments and we are confident that the higher ambition level will support our long term operational efficiency. But to be realistic, this will be realized gradually over time. With that, I'd like to turn to Slide 16. On Page 16, the segment presentation may be new, but the fact that we are well diversified across markets As seen on the left hand side, The UK and the Italian markets are our two largest markets in terms of loan portfolio. Together with Poland, they are also the ones where we have seen the strongest growth over the last twelve months. On the contrary, in Germany, growth has been modest. Looking at contribution to group operating income, Italy stands out with an increase of 59%. This reflects a combination of underlying growth and rather strong collection performance in Q1 twenty eighteen. In The UK, the income growth of only 9% is affected by positive portfolio revaluations of SEK14 million in Q1 twenty seventeen. On the right hand side, which illustrates distribution and development of profit before tax, I would like to make two comments. Firstly, as you may remember, we have in December 2017 partly as a result of modest growth initiated a consolidation of our two German sites into one. And although this is progressing as planned, it has not yet had any effect on the cost level in Germany. That statement will be largely true also for Q2. Secondly, as already mentioned, the level of legal collection activities in Poland was high in Q1. And one can note that since interest income is now calculated based purely on parameters related to gross collection, periods with high expenses will not be offset on the revenue side. Now let's turn to Page 17. As illustrated, our funding cost is not only very competitive, it's actually improving further. And interest expense in relation to NPL book value is now well below 2%. That is, of course, the result of systematic efforts over many years with the launch of euro deposits in Germany being one of the more recent milestones. During Q1, we have attracted another €120,000,000 in that offer, bringing the total up to €220,000,000 We expect this attractive funding source to continue to grow, which also improves the currency matching between assets and liabilities. Now let's turn to capital and liquidity ratios on Page 18. With regards to capitalization, our CET1 ratio stands at 11.4, which is right in the middle of our targeted range. From this level, there is a significant buffer to regulatory requirements. As you can see in the second chart, our capital ratios have decreased slightly since year end 2017. This is partly an effect of us having deployed capital into new loan portfolios and partly an effect of existing loan portfolios translating into a larger value as measured in SEK. Our liquidity reserve remains strong and has increased by around SEK200 million since the beginning of the year. All in all, we are well capitalized with a strong liquidity portfolio ready to capture growth going forward. And that's a great way to hand over to Klaus Anders again. Well, thanks for that, Kristor. And if you then turn to page number 20 in the presentation, you shouldn't come as a surprise what our summary and key takeaways and priorities are. So number one, we definitely see a positive and healthy market out there, lots of good transactions to be made, healthy and strong pipeline. We see that consolidation is a key trend and also market maturation. So our priority is really around growth and also becoming more operationally effective. So that's takeaway number two. Number three is our steps into adjacent asset classes. We have already capabilities and skills in other portfolios outside consumer unsecured and we are taking important steps. We have taken important steps in Q1 and we continue to take steps into these portfolios. And at the point number four, there is a key trend in our industry as well as in other industries that digital needs to be our key priority and so also for Hoist. So with that summary and takeaways, we conclude our presentation and we will hand over to the operator. Thank you. Thank you. Our first question comes from Victor Lindebe from Carnegie. Please go ahead. Your line is open. Yes, thank you. Good morning, guys. Couple of questions from my side, starting maybe from the top of the It's been in Q1, and this is, to some extent, driven by our Polish business and our Italian business. With regards to vintage, it's a mix. Alright, okay. And on these collections, I think it was almost SEK100 million of extra collections. Now can you estimate what incremental margin you have on these collections? Obviously, mentioned, there is slight cost related to collecting as well. But I suppose it should be very nice margins coming in on this. Is that something you can estimate and help us with? I'd say that, of course, there is some level of cost here, but indeed, we're very happy to see such strong performance and it supports our P and L. So your assumption is correct. Yes. Okay. On going forward then, when you have provided the ERC curve, just to understand the housekeeping question on this, you don't assume any outperformance or is there an element of outperformance incorporated in your ERC profile? No. Perfect. I have a few more, but I can get back in line if there are other analysts also having questions. Thank you. Thank you. The next question comes from Adidas of Ogontari from Morgan Stanley. Please go ahead. Your line is open. Thanks for taking my question. Good morning. My first question is just interested in the strong growth you are seeing in The UK. Given it's mature market, how sustainable do you think this is? Right. So you're right. The UK is absolutely a mature market. So we're happy to see growth in that market. I think one important aspect we should have in mind is that in many ways, our biggest competitor isn't really the other competitors in the industry. It's the in house collection that the banks are doing themselves. And that's partially the driver we're going to see in many markets, also many mature markets that specialists are beating generally in this space. And as long as we continue to invest in knowledge, skills, IT, future solutions, I think banks will continue to outsource and offload a lot of nonperforming loans to specialists like ourselves. And are you seeing any benefits from the implementation of IFRS nine from January? Are you seeing any benefits from that? Hi, it's Kristian Wassner here again. I think it's really too early to tell if this will have an impact. We've seen a strong market and that's great. If it's down to IFRS nine or not, I think time will tell. No, I agree. I've been able to, as I said, see a lot of clients lately, and we cannot really quantify the effect of this at this point in time. So it is one of the trends that may have a positive impact on volumes. And just going back to The UK on Slide 16, acquired loan portfolio in The UK increased by 36% year on year, or the net operating income is just 8% higher. Maybe if you could just maybe give some comments on that. Yes. So in the new segment reporting, we are disclosing a few fewer lines than before. And what you should be aware of then that in the net operating income, we also include portfolio revaluations. And it happened to be the case that in Q1 twenty seventeen in The UK, we had a bit of positive portfolio revaluations, so that which we didn't have in Q1 twenty eighteen. So that will impact how you view The UK here. Okay. What's the nature of the portfolio revaluation, if I may just add? As we've communicated earlier, of course, we review all portfolio projections on an ongoing basis and revise them when needed. And this can be a mix of reasons. I don't remember the particular reason in Q1 twenty seventeen in The UK. One final one. I think in your release, you mentioned the forward flow agreement with an Italian bank. If you could give any details on that? I don't think we will give a lot of detail on the forward flows. I think we are really happy to see that forward flows is increasing. It creates a lot of, yes, clarity, transparency for us in terms of earnings, earnings visibility, a immense relationship with the banks. It's a modern way for banks to deal with non performing loans. So we are happy to see that forecloses is increasing. And I don't want to give any share any details on the Italian bank transaction specifically. Okay. Thank you. Thank you. You. The next question is a follow-up question from Victor Lindebe from Carnegie. Please go ahead. Your line is open. Thanks. Coming back to the P and L and looking at the underlying amortization level in relation to gross collections, collections, I think it was in Q4 44%. And now in Q1, it's 47%. If we exclude outperformance, it's at 50%. Can you give us any hint or guidance on how we should think about this trend going forward? Was it a touch elevated in Q1? Or is this the new base level you think going forward? And has there been any effects coming in from you changing sort of or adapting to new accounting rules in this number or this ratio? Yes. So I think as communicated earlier here, we do not expect that there will be any or there will not be an effect to expected profitability as a result of transition into new reporting standards. This is more of a case than presenting it a bit differently. With regards to guidance on amortization levels, we have not given that previously. And the reason for not doing so is that this can vary a little bit depending on what kind of portfolios you acquire and how that plays out over time. So it could be a little bit tricky to guide on that. Yes. Okay. And just to understand, if I understood you correctly, when you had the formal presentation today, you commented on that or at least alluded to that with the new effective interest rate method focusing on gross collections, amortization level, is that sort of affected by that? So let's say that you go for more legal activities in The U. K. Or in Poland, then it will affect the OpEx and burden earnings, whereas in the past, you have sort of capitalized this or adjusted the amortization rate. Is that correctly understood? That's very well described, Victor. Thanks a lot. You're absolutely right. So the way we account for revenues now post transitioning into IFRS nine is it means that the revenue side will be disconnected, you can say, from the cost level. So if you have a quarter with very high cost, then it will burden the P and L. But of course, over time, we do expect that these things will even out. Yes, perfect. Absolutely. And then looking more on the costs in the business now, you report an EBIT margin of 34%. So it's down by four percentage points year over year. And you have this medium term target of 40%. And I understand that you, in 2018, had sort of a transition year when you reorganized Germany, for instance, and you have higher collections in Poland. But is it possible for you to quantify how much in Q1 related to having this elevated OpEx sort of saying, just to get a sense of where you are underlying or where you think you are underlying? So as you say, there's quite a steep increase of expenses then overall. And roughly, you can think of this as one third being FX related, one third being current circumstances or temporary circumstances and one third being related to the strategic considerations that we've described. I think that's high level, that's how you should view And that's when you are winning year over year in increasing OpEx, best to understand. Yes. Okay, perfect. I have two integrated questions then I am done for today. First, maybe not so much questions for you, Claus Anders, more nitty gritty, unfortunately. The core Tier one ratio, you mentioned it was affected by FX. But you do you should have hedges mitigating this. Just to understand, was this a quarter where you did not get the full benefit of that? Or is it a mismatch on the asset side versus the liability and equity side? Yes. So we do as you say, we do have a mismatch between the asset and liabilities on the FX side, and this is exactly what we are hedging. So the way we have implemented our hedging strategy means that we are protecting our equity from effects due to FX changes. And that strategy we've been applying over the last few years and it's been working well. So this, however, does not mean that you cannot have any impact on the capital adequacy since the capital adequacy is also a function of the risk exposure amount. So even though equity is hedged, the risk exposure amount will increase as SEK is depreciated. And the way we've dealt with that is that we've included a buffer for this in our capitalization targets or range. So this is these are variations that we can sort of stand in that range where we operate. And as you saw, we are in the middle of the range now. So it's not a big surprise as such. Yes, yes, I got it. So it's more the ratio that was affected, not the absolute level of the equity then. Then on the final from my side, maybe for Michel, I was looking at the slide now, Slide number seven, I think it was, on the market outlook. And I think if I read it correctly, the unsecured deal value stands at SEK3 billion or just below SEK3 billion in 2017. And just looking back to the Capital Markets Day, you provided a slide where you anticipated growth of 7% or so per year going forward, and that suggests that you should be closer to 3.5% or 3.3% maybe in 2017. So just to get a better understanding, has the market not developed as favorably as you were hoping for? Or is it a change of definition? Or is there something else behind this somewhat lower number than what I would have thought? It's always hard to predictions, especially about the future is a famous quote. But the market has progressed according to our expectations. And I mean, of course, you can also see that in our growth and our numbers. And what we've mentioned previously, I think we mentioned it on our Q4 results, is that when looking at the market now, we see a continued healthy growth on unsecured consumer loans coming to market, and you should expect us to grow in that segment. But we see that growth being outpaced by consumer secured, SME unsecured and SME secured. And what we have done and what we are doing is, of course, being prepared and well prepared to capture that growth going forward. All right. And that was all for me. You so much. Thank you, Victor. Thank you. There appear to be no further questions. I return the conference back to you, speakers. All right. So thank you all. It was Kristian's and my first presentation. We are happy to do this, of course, and we are enthusiastic about the prospects and we think we have a good future ahead. So thanks for participating and have a great day.