Good day, and welcome to the Pandox Q2 2018 reports conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Anders Nissen. Please go ahead, sir.
Well, good morning, everybody, and welcome to this presentation of Pandox reports for second quarter and half year 2018. My name is Anders Nissen, as said, and with me I have Liia Nõu, our CFO, and Anders Berg, Head of Communication and Investor Relation. This presentation will be as always divided into two parts. First, we have the presentation and followed by the Q&A session. Let's turn to page two, please. For the second quarter, our headline is profitable growth. Maybe I should start to say, we can after that, say that the second quarter and the half year reporting a good growth in both revenue and earnings. Total net operating income increased by 33% for the quarter and 29% for half year. Return on equity was 20% on an annual basis. On top of that, we also have a cash earning grow by 26%.
The main driver for this is profitable acquisition in new large market. This is U.K. and Ireland. Let's come back to that acquisition specifically. We continue the strong development in Brussels, where we have eight big hotels with more than 2,000 rooms. A stable market in general with a positive underlying demand is the driver behind this positive development. If we move over for like-for-like, you can see two different pattern. One is in property management, that we report a marginal decrease in net operating income, and we can see a strong growth in operator activities. Let's move over to property management, where, as I said, we report a slightly negative net operating income. Which is absolutely correct, but the underlying trend is stronger. We have a renovation effect, hotels taking out for renovations that we then decrease the rent revenue.
We also have one-off effects happen first quarter or first half year last year, which didn't happen this year. If we adjust with these two, the growth will be something around 1%-1.5%. If we then move to the operator activities, it is stable and a solid 15% for the second quarter and 17% for the half year, mainly driving by strong development, as we said, in Brussels. Next page, please. This is a deep dive in net operating income, which increased by SEK 207 million for this second quarter. That is an increase for 33%. There is a couple of strong driver behind this good growth. First of all, strong performance in U.K. and Ireland. The 21 hotels we acquire end of last year for close to SEK 7.5 billion, GBP 680 million in sterlings.
That is strong growth, and the hotel has coming in at least at expectation, a little bit even better than that. We are very happy with this start. The second strong driver is a good development in Brussels. We also had a seasonally stronger quarter. In Q1, we had the Easter, and this year we have a more full April, and in general, favorable market conditions. On the negative side, there is fewer business days in Europe due to this calendar in May, where many red days come in the middle of the week, so that took away some business days. The weaker trade fair calendar in Germany, that the same argument as I said before, but you should adjust me for having a more correct like-for-like.
This fair calendar in Germany, which is huge business for the hotel industry, is coming normally every second year, so we can expect a strong next year in Germany again. But this year, we have less trade fairs. As I said before, we also have some renovation effects. Next page, please. This shows focus on profitable growth on page four. You can see here we have been very active since we came back to the stock market. We had during that time, double both operating income and total cash earning. That is, of course, strong numbers. That's supporting by acquisition of close to 50 hotels all out of Scandinavia for SEK 17 billion. We also have investing SEK 1.8 billion in cash flow-driven project in our existing portfolio, and we have also signed 60 new lease agreement.
All in all, that had reflecting a result who, as I said, nearly double both net operating income and total cash earning. Next page, please. Take me over for the Pandox portfolio overview as it looks today. We own 143 hotel properties with 31,600 rooms with a value of SEK 53.1 billion. 86% of this value coming from the property management, where we have lease or the lease portfolio with the third parties that we have turnover-based leases and share investment with professional operators. The other 14%, we operate ourselves in operator activities that are representing 50 hotel properties. All in all, this is SEK 53 billion of value. Next page, please. This is the new world of Pandox. After the acquisition of Jurys Inn in U.K. and Ireland, we are representing in 15 countries, 93 destinations. The largest market is Sweden.
After that, coming U.K. and Germany at the same place, and then Norway, Denmark, and Finland, and Belgium are more or less on the same levels. All in all, this give us a very interested map and a Pan-European position where we now are in most of the important market in North and Europe. That give us a higher potential because we have more access to do good acquisitions, and it balance out the risk because the business cycle is moving differently between all these countries. That meaning that all in all, this diversification has a very strong element for Pandox for growth for the future. If we move over to the next page, please, we can see that in these 15 countries, in 83 cities, we cooperate with 20 different brands.
This is, of course, another strong element of Pandox today, when we are in so many countries that we strengthen our network with our partners. Scandic is our biggest partner, followed by Leonardo and Jurys Inn. Other big partners is Radisson Blu, Hilton, NH Hotel Group, and InterContinental. This mean that we have this broad selection of operators and brands combined with a wide geographic market, give us a chance of a tailor-made strategy. This is, again, as I said, this position is something that we really are happy to have reached. If we move over for the next page, please. Go over for markets. Please look at this in the gray areas. We only report April and May. On the other areas, graphs, we report April to June.
In Europe, there had been strong growth, in these four quarters, starting from Q2 2017 - Q1 2018, with 7%, 6%, and 5% growth. If we look at how it looked after May, it was -4%, then we should know that June was very strong out in Europe. So, after June, with these numbers coming in, that will also be a positive numbers in the area of what you can see in Q1 2018. We also see a strong growth in Finland, Denmark, Sweden, and Norway, with 3% up to 7%. In Austria and Germany, we are at minus. But again, it's only April and May. When we include also June, this will be slightly positive or at least level out. U.K., the same. Ireland, which is performing very strong, is already up 6% and had also a strong June.
That will increase even more than this 6%. Next page, please. Then we are into key markets like Helsinki, Stockholm, and Copenhagen. Helsinki is -1%. The underlying trend is very strong in Finland, but last year in June, they had two one-off big international meetings. So Q2 was compared to last year, weaker, but the underlying trend is strong. So we expect that Finland will continue to have positive development the rest of the year. Stockholm, as you can see, is 5%. Let's come back to that. Copenhagen, back after a weak Q1. Copenhagen came back, and one of the reason was the World Cup in hockey with taking place in Copenhagen with a lot of Swedes there occupy our hotels. Oslo also strong. We see now a new hotels coming back into the market, but still very solid numbers. Frankfurt, -8%. That is April, May.
That number will be generally be better after June. But in Frankfurt is one of those cities where the fair trade calendar was stronger last year. So that will be continued to be a legacy number. Montreal had last year an anniversary, so these number are still good, but last year it was extremely good. So we can expect that Montreal will continue to have a negative number the rest of the year. You can read it all up, and will be even better with including June. The same for Berlin. Brussels is already up to 13% and had a very strong June as well. That is a market who will continue to very strong the full year. Stockholm, which had now into a phase of overcapacity, as you most likely know, and we had weak quarters.
You can see in Q2 2017, it started with - 4. - 3, Q3, and the end of last year, it was also - 3. The quarter one was due to this new capacity and Easter, bad of 6%. Stockholm coming back, and now 5% up, specifically our market up in Stockholm North had been very strong at this quarter. Year to date, Stockholm is - 0.4%, which is slightly better than our expectation. But we believe that Stockholm will continue to show negative growth the rest of the year. But the worst is definitely over. So I move over to Liia Nõu. Hand over to Liia Nõu. Thank you.
Thank you. Thank you, Anders. Both the second quarter and year to date, Pandox recorded solid earnings growth in both business segments. Please note that an accounting change for other property revenue and property costs relating to portfolio acquisitions in the U.K. and Ireland from net to gross increased revenues and costs by SEK 30 million, respectively, in the second quarter, out of which SEK 15 million relates to the first quarter. Some key numbers for the quarter and half year. Starting with the property management. Rental income amounted to SEK 791 million in the second quarter, an increase of 39%. Adjusted for the change in other property revenue described earlier, the increase was 30%. Net operating income amounted to SEK 664 million, an increase of 37%. For operating activities, net operating income amounted to SEK 167 million, an increase of 20%.
Like-for-like property management reported a decrease in rental income and net operating income of 0.5% and 0.6%, respectively. Like-for-like operating activities reported an increase in revenues and net operating income of 3% and 15%, respectively. Total cash earnings amounted to SEK 536 million, an increase of 26%. Measured from year-end 2017, the unrealized value increase for investment properties amounted to 1%, and for operating properties, the unrealized value change amounted to 0.4%. End of period, EPRA NAV per share was approximately SEK 154. Adjusted for dividend and proceeds from the director share issue, the annualized increase was approximately 20%. Next page, please. Financial expense amounted to a -SEK 198 million. The increase is explained by different factors. An increase in interest-bearing liabilities after implementing acquisitions, where debt denominated in foreign currencies had increased, especially in British pounds, where LIBOR is approximately 100 basis points higher than EURIBOR, et cetera.
Also, Pandox has interest hedge a larger share of its loan portfolio. Finally, a continued weaker Swedish krona versus the other currencies that Pandox have loans in. Next page, please. In the second quarter, property management benefited from profitable acquisitions, stronger seasonality, and an overall stable hotel market with positive underlying growth. The development for the recently acquired hotel properties in the U.K. and Ireland was strong, supported by both favorable market growth and improvements at the hotel levels. However, a combination of fewer business days and a weaker trade fair calendar in Germany, as well as some new capacity and renovation effects, as Anders explained earlier, led to largely flat like-for-like growth. In the second quarter, markets outside the Nordic region accounted for 44% of the total rental income. Rental growth in the comparable portfolio was positive in Sweden, Norway, and Austria.
Stronger destinations in the second quarter were, to mention a few, Malmö, Gothenburg, Oslo, Frankfurt, and Munich. In Stockholm, rental growth was 3%, primarily driven by growth outside the city center. Next page, please. In the second quarter, profitability in operating activities continued to improve, driven by Brussels and to some extent Germany. In the quarter, Pandox benefited from more and larger meetings, as well as increased leisure demand. Please note that the Scandic Grand Plaza with 100 rooms is still closed for renovation. Next page, please. In the first half year, total unrealized and realized changes in value amounted to approximately SEK 472 million, of which SEK 445 million for investment properties and SEK 27 million for operating properties. The value increase is explained by improved cash flow and fractionally lower yields.
Year to date, a total of two hotels have been reclassified from investment properties to operating properties. It's the other way around. From operating properties to investment properties, thereby explaining the SEK 773 million assets being reclassified, i.e., from operating properties to investment properties to hotels in Brussels. End of period, the average valuation yield for investment properties was 5.55%, and for operating properties, it was 7.27%. Next page, please. Finally, a quick look at our EPRA NAV and financial position. End of period, EPRA NAV per share amounted to SEK 154. This corresponds to an increase of 20% on an annualized basis, adjusted for dividends and proceeds from the directed share issue. The increase is in part explained by changes also in currency exchange rates following a weaker Swedish krona. Loan-to-value amounted to 50.6%, and liquid funds and long-term unutilized credit facilities amounted to approximately SEK 3.1 billion.
To summarize, Pandox financial position remains strong and stable. Next page, please. With that, I hand over to Anders for some final words.
Yeah. Thank you, Liia. Yeah, the same guidelines as we had said in Q1. We have a positive outlook for the rest of the year. Market growth is stable. With our high-quality portfolio, we will take our market shares, and we most likely will present a positive like-for-like in both property management and investment properties due to the argument I have gone through before. The portfolio investment continued to be in good levels. We have now signed up for SEK 940 million, and this is an important part of our investment strategy. Operations doing well, specifically in Brussels, and we will see continuously a good trend there. Opportunistic acquisitions, we have started to look more, if I say so, to see if it's possible to acquire after the first quarter after closing the Jurys Inn deal. We were in consolidation.
We have now an appetite to see if we can do more acquisition. Maybe not at that size, but still may be possible to do in some few profitable acquisition. That is nothing we have a reason to report on this stage. So thank you very much. Now it is Q&A.
Thank you. If you wish to ask a question, please press star one on your telephone keypad. Please ensure the mute function on your telephone is switched off to allow your signal to reach our equipment. As a reminder, to ask a question, please press star one. We will now take our first question from Dominic Freemantle from Morgan Stanley. Please go ahead, sir.
Yes, good morning. I just wanted to focus on your like-for-like rental growth a little bit more, to understand if there is a change in trend here. Clearly, there are lots of moving parts, and you have mentioned some of the one-off impacts. Can you please just help try to quantify some of those impacts you mentioned? I think you had said at first quarter that the negative Easter effect in the first quarter had about a 3-4 percentage point impact on the growth rate, which one logically might have expected to unwind in the second quarter. Therefore, one might have expected a higher like-for-like growth rate. So can you just help to quantify what the impacts of these additional one-off impacts were?
Secondly, what you think we should be expecting as a trend rate over the next 12-24 months to the extent that is possible. Thank you.
Yes, Dominic Freemantle, you are absolutely correct that we said that the effect of the Easter is 3%-4% and maybe not all that came in in Q2 because of one-off event. The Easter effect is 3%-4%, but that was also a one-off event last year, specifically in Germany, which took down the like-for-like comparison to negative side. I think you can expect that that slightly will go over for positive growth when you see the end of the year, and Germany has a very strong trade fair calendar next year, so that is coming back. I will say in Germany, we talk about at least 1% of growth. Renovation effect, that is hotels that we taking out for renovation. That is also something in the area of 1%, something 0.5%-1%. That is also hotels that now will expect to come back the end of the year.
Most likely, that will take a few quarter before you see the full effect. On the other hand, we also taking out other hotels all the time, meaning that like-for-like comparison is something always not so easy to follow. But in general, for this quarter, you see about 1% from one-off and close to 1% of renovation. There will be positive like-for-like growth full year, both in property management and investment properties.
Am I doing the wrong
Yeah.
Is it the wrong-
Ask, yeah.
Sorry, if I can just follow up. If I take your 0.5% rental growth that you have delivered so far this year, and I am to remove and adjust for the 3%-4% Easter effect, and adjust for the other effects that you mentioned. Does that not give me a so that would give me a low single-digit growth rate on an adjusted basis. Are those roughly the right maths or?
Yeah. You are absolutely right. Yeah.
Okay. Just one final follow-up, if I may. What is happening on valuations, on hotel valuations? Would you assume that the yield compression that you have seen in recent years is over now or are you seeing any evidence that that is continuing?
Well, for this quarter, there has been fractionally lower yields and this been especially in the Nordic region. We haven't taken down the yields at all in any part than in the Nordic region. As we said before, we adapt to external valuating yields, and that's based on transactions currently happening. There should be some room for additional yield compression, we believe. Typically maybe outside of Nordic, this yield compression comes in the end of the year. So I would assume some-
Can I put it a slightly-
But it's.
Can I put it a slightly different way?
Yeah.
Can I ask it in a slightly different way? Within the flat yields that you have delivered in Q2 2018, are there any regional differences in that trend?
Well, again, as I said, in the Nordic region, in Sweden, some part in Oslo, in Finland, some hotels, the yields have continued to come down. It's a combination of both the market but also the hotels as such, because again, depending on yield is also depending on the sort of site location of the hotel, what the investment has been done, et cetera. I do expect some yield compression to continue to come down also outside the Nordic region as well.
We see for acquisition, Dominic, that like the one you're seeing will most likely have been, if that will be done today, that will be done in a low yield. That's something that could give you guidelines that most likely the valuation will also come to the same conclusions. But that always takes some time.
Okay. Thank you.
We will now take our next question from Niklas Ekman from Nordea. Please go ahead.
Yes, good morning. Thanks for taking my questions. Could you elaborate a little bit on the supply side of the strong hotel market? Do you see any signs of higher supply outside of the Nordics that might mitigate the like-for-like or the contractioning yields?
Well, Niklas, this is more or less the same picture as we had in Q1. There are a few markets which have new capacity coming in or already has coming in, like Stockholm. If you start with Stockholm, that happened over a few years' time. At the end of last year, there was an overcapacity situation. Now you can see that that is fading away, and from a lower level, you can soon see a possible to level out, let's say end of this year or maybe beginning of next year. Then we do not see any more big hotel coming into Stockholm. So next year, this should be a more stable market. Heathrow has also a lot of new capacity coming in. We know that according to this acquisition we have done, so that has been a part of our valuation of cash flow calculations.
If we just look at the market, the market will continue to go down in RevPAR in Heathrow at the end of this year and beginning of next year. That is something maybe the effect is a little bit stronger next year than it is this year. We are talking about close to 10% or even 10%-12% in Heathrow market coming in over 18 months. Half of it has come in and you had the rest, next half will come in the rest of the year or beginning of next year. Copenhagen, which had a bad start this year, but that was not due to a new supply. It was just because that they had a very good start the year before. But now Q2 has been strong.
What you can see for next year is that coming in really a lot of new capacity, and that will continue two years. In Copenhagen, you definitely will see pressure on RevPAR 2019 and 2020. We have reported that before. The rest of the market is quite okay. There are a few hotels coming in Manchester, but on the other hand, it is a very strong market, and it is in the mid-market segment. It is not specifically where we have our hotel. You see some new hotels also in Germany. Most of it has already come into the market, and the market has been adjusted. It is not a big red alarm for new supply in Northern Europe.
Okay. The delta from the first quarter, this sounds very much like what you communicated already.
Yeah.
There are no signs of any further capacity increases affecting the market, so to say.
Now some are coming in and some have already been adjusted in. So a little bit in and out all the time. But no red flags more than markets that are pointed out. But that we had done before. Heathrow, Stockholm is better. Copenhagen will be tough the next two years. But the rest are looking quite good. If you look at many markets like Dublin, if I take one example, it is a very strong RevPAR growth. But there is very small possibility to build new hotels into city center. The same in Amsterdam and many other cities as well. It is not that easy to build new hotels in city center. If you compare it also with the office building where often the investment cost is lower and the rental income is higher. So we do not see any big threat for that.
Yeah. May I also ask, because you are mentioning that you start looking at acquisitions again. You have had a, well, not that long consolidation period after Euroscene. Could you elaborate on the investment capacity without coming back to the market? Potentially also, if you are looking more actively on greenfields in any particular market?
We have the capacity of doing acquisition for, let's say, EUR 5 billion maybe. It depends on if you go up to 60%, then we most likely have EUR 1 billion, but we don't want to go up too high and too close to 60% in a market like this. We have the capacity of doing acquisition for a few billions at the moment. Then if we hope for what Christopher was into, that maybe there will be continued yield compression, that maybe will mean that the loan-to-value go down because we will have higher value of our properties. But that is nothing we see at the moment. That is the capacity we have. What sort of hotel are we looking at?
Yeah, the consolidation period might be short, but we have an appetite to grow specifically in U.K., where we see a lot of opportunities. The business model that we have, and very few have in U.K., that we can buy hotels with leases, without leases, changing brands, and taking over hotels who need to be operate over some time, changing brand or whatever it is. That sort of model very few have, and we see a chance of expand that further into U.K. With that said, that does not mean that we are into any final phase at the moment. We just announced that we start to look at it again.
Okay. Fair enough. Can I also ask on the financing costs? They came a little bit above our expectation. I might have got lost on the presentation, but were there any one-off items in this interest net in the quarter?
Not really. But again, the Swedish krona has continued to weaken again.
Yeah.
We report in Swedish krona and 70% of our interest is in non-Swedish krona. That has continued to weaken. We have put some hedges in place, interest rate switch hedges in place in the first quarter. That ran for a whole quarter. In the second quarter, we have a little bit increase arrangement fees and underlying LIBOR, especially where we have an increased number in GBP borrowings, have moved somewhat. So it is a little bit bits and pieces. But this is the current level which is ongoing.
And a follow-up on that note. What we are hearing from the Swedish companies are that a refinance now looks even more promising, especially when you look at bank financing. I guess that is a major part of your portfolio. What is your thought? Do you see any refinancing opportunities at the moment, or is it pretty stable?
As you know, our loan portfolio, there is the refinancing done continuously. We have a 3.0 duration for the portfolio. But of course, there is loans being refinanced as part of the usual business. We do not see any major shift in the communication with the banks. We have a very good relationship with all the banks, and continue to have that.
I think it's pretty stable.
Okay, thanks. Thank you very much. Just one more question.
Yeah.
We will now take our next question from Albin Sandberg from Kepler Cheuvreux. Please go ahead.
Yeah, hi there. It's basically some follow-ups to what has been discussed. I guess if you just could confirm there, Anders, that you were talking about some kind of underlying like-for-like growth of around 1%-1.5%. Was that on the rental income side in the property management division?
Yeah.
Yeah. If we were to, just for hypothetical reasons, add the U.K. and Ireland portfolio, what would that be then?
That is a very strong question, because if we add that one and if that would have been a pro forma, we have added, it will grow to close to 3%.
Yeah.
Underlying trend is strong.
Yeah. Good, thanks. Just so I understand the renovation impact, if that was any specifically for this quarter. The reason for asking is more that my understanding is that you kind of always have a CapEx development program in place. So there should always be, it seems like, some kind of renovation impact, maybe looking into H2 as well. Is there something specific happening this quarter?
No, you are totally right. There is always ongoing renovations with taking out capacity and some coming back, and then some hotels going into renovation again, so you saw it. But this effect, the negative effect, had been slightly bigger than normal because we have had a few big hotels like Park in Stockholm, like Hyatt in Montreal, to give you two examples, that we are doing a lot of big renovations. That is why we mentioned it specifically.
Okay, great. Thanks. Also just final question, obviously, with the acquisition, and your track record there, and the comments you are making. Do you feel that the transaction market is liquid right now? Has it changed in any way during the year? What do you see maybe for the rest of the year? Are there more buyers than sellers out there right now?
Yeah. There have been a yield compression on acquisition. As I commented before on Euroscene, if that deal should have been done today, that would have been more expensive, I believe. The same with those we have done in Germany. That is one point you can take. On the other hand, if you look at hotels who is underperforming or there is something you need to take over, like operations or changing brand or do bigger renovations, that are still on very attractive yields. Because those hotels are very few buyers. But if you look at one lease hotel in London or in Glasgow or in Berlin, it had been more expensive compared to a year ago. So you need to be more selective than ever.
But it is always possible to do acquisitions, specifically with the model we have, where we can do all sort of investments and all sort of acquisitions, and it is very few in the market who have that capability.
Okay, great. Thank you very much. Those were my questions.
As a reminder to ask a question, please press star one. We will now take our next question from Simen Mortensen from DNB. Please go ahead.
Yeah. Hi. Most of my question has been answered already, but I have a few more to add on. I can first of all start off with, in the cash flow, we do see that investment in properties and fixed assets are at SEK 122 million, down year-on-year, while the portfolio is bigger and you continue to talk about you doing a lot of investment. I was wondering, when will we see CapEx coming up here? Will we see it coming to a higher level? Do you see the need to do more investment in the new portfolio you acquired in the U.K.? Will you guide us on in terms of maintenance CapEx?
If you look at investment, at the moment, we have contracts for SEK 940 million. That is a decision we have taken. Most of this is together with partners like Scandic, Rezidor, or Leonardo. 90% of this is cash flow-driven investment. We have a few investment that we do to keep the technical standard in good place. That is maybe SEK 50 million per year, something. Change facades and windows or things that not drive cash flow. The rest of the investment we do is linked to that we will take market shares together with our partners, or we doing in a market who expect to grow where we can have a stronger position. We can add more rooms, so we can add more beds, something that adds more revenue. That is in general, we are looking at this sort of investment all the time.
If you look from a technical property perspective, the portfolio is in very good shape, and we do not need to do any investment in Euroscene at all due to two factors. One is that the standard is very good, and also that the operator has most of responsibility in the lease contract that we have signed with each other.
Okay. In terms of the assets held for sale in the balance sheet, just wanted some clarification. We know the Kiruna hotel will be transferred in Q4. That is just part of it. Could you tell us a bit about the yields and when that transaction will be coming through on those assets which is on the balance sheet held for sale?
You mean the one which is out except for Kiruna?
Yeah.
Everything else except Kiruna is actually the reorganization of the Euroscene portfolio of the 21 hotels. As you know, we bought 100%, and we are working as we speak with the full reorg. So, the assets held for sale is the part that will actually go to the Leonardo the Fattal group, which is already specified in price. That is the GBP 120 million which they chipped in.
Will that impact the P&L in any sense? Do you have revenues-
Not at all. It will take down the balance sheet, obviously, because the assets held for sale and the short term, the loan from Fattal, obviously these will be netted. As we said from day one, we report as if the reorg would have been done already. So the P&L won't change a single digit, and the balance sheet will on both sides diminish with the equivalent plus GBP 120.
Okay, and when do you expect that one to just happen?
Within 2018 and hopefully sooner than later.
Okay, thank you. I have one more question.
We will now bring a question from Patrick Simon. Your line is open. Please go ahead.
Hi, this is Patrick Simon from Carnegie. Two questions from my side. From the operating activities, you obviously have very strong NOI margin, tailwind from Brussels, I would imagine. Are there any reasons why we should expect the margin to drop during the next few quarters or should this be a new normal?
No. We see a stable market in all our hotels that we operate ourselves excluding Canada, which has very strong last year and because of anniversary. But in Germany and Belgium, we see strong growth, specifically in Brussels. Very positive is that most of the growth is coming from rate, and rate means that the efficiency is going up. We have a positive outlook for rest of the year.
But having said that, there is some seasonality on the quarters of course, first quarter being weaker, et cetera. So, the year to date numbers you should look at. But it's, yeah.
And we have had this the second quarter, second half.
Okay, perfect. Then the final question on the current paid taxes was higher in the second quarter, obviously with the U.K. acquisition that was expected. If you look at the first half, it was approximately SEK 100 million. Do you think SEK 200 million as a running rate is a fair assessment?
Yeah, I think at a running rate around 10%, that's sort of the efficient tax. As you know, there is carry loss forwards especially in Sweden and in Norway, Sweden and Norway. But the other part is growing. So yes, around 10%.
Crystal clear. Thank you.
Thank you. There are no further questions in the queue at this time. I would like to turn the call back for any additional or closing remarks.
Okay. Thank you very much, and have a nice summer.
Thank you. That will conclude today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.