Hello everyone, welcome to Teqnion 2025 Q2 Q&A. To start off our [Foreign language] , thank you everyone for taking your time from your busy schedules and vacation to read our quarterly report that was released this Saturday and for joining us on this call today. We will, as always, alternate between the questions that were sent in to QA@teqnion.se and the ones that we get live here in the Q&A function. Before we start the actual Q&A session, I would like to hand it over to you, Johan, for a quick overview of the quarter.
Yes, thank you. Hello everyone and welcome to our office here in Solna, north of Stockholm, and the Q2 Q&A for 2025. This is my friend Daniel, who works with acquisitions and is the Deputy CEO of Teqnion. My name is Johan Steene, I'm the CEO of the company group since 2009. Talking a little bit about the first half of the year, we see that the market is rather slow. It's been difficult to generate orders and we need to work harder to get sales. This is in the process of doing a lot of changes on the organizational level and how we measure ourselves within the group. We are on the road to doing something that will be the new Teqnion. We have, the group has grown quite a bit.
We have, as we talked to you about, going out to 2024, we had a lot of acquisitions on the way in. We have finalized those. We have seven new companies in the group now, which is fantastic. We're strengthening our position in the U.K. with five new acquisitions there, and we have two more in Sweden, which is really fun. It was several years since we acquired something in Sweden when we had two great companies here. The operational earnings that are presented in the quarterly report are weak. We are very dissatisfied with that. Compared to 2024, we see that it's more or less flat. I pointed out that you should disregard the positive effects of the earnouts. If you compare that to the positive effect of the earnouts in 2024, you see that the operational underlying earnings are more or less flat, which is not fun.
Still, maybe not as bad as you can read. We have, as mentioned in the report as well, reached a level or a plateau in Teqnion now where we need to reorganize how we operate. We have done that during the spring by adjusting how we measure the subsidiaries and how active we are when it comes to supporting them. I mean, the key for us as a group is, of course, to keep the subsidiaries autonomous. They should have all the decisions made out there up to the point where they show a trend which is not good enough or is trending downwards. We know early on now that they are in need of support and we will demand from them to turn that trend around much more quickly than we have done previously.
One way of doing that is that we introduced a new type of role, so to speak. We have called our coworkers that work closely with the subsidiaries before CEO coaches. We still have a few of those, but now we will introduce regional managers. We now have a U.K. manager responsible for making sure that the U.K. companies or the international subsidiaries perform on the right level and are trending in the right direction. He's now based, he's been with us for a little bit over a month. Everything looks really, really well. To just put some words on what that is, it's more of a super CEO coach maybe that follows up more closely on the metrics and makes sure that we implement actions as soon as we see the trends turning in the wrong direction or flattening out.
It is a new way of working, not introducing a new level of organization, but more of one point of responsibility and a more heavy skill set in that type of individuals. We will probably, not probably, we will introduce a similar role in Sweden, hopefully during the fall or in the winter. We have a plan for that and we see that the U.K. will stand as an example of how we should organize ourselves now that we reach this level of volume. Maybe I'm repeating myself, but that is what it is. I have, as also explained, a frustration over that things take time. We have implemented quite a lot of changes and a few new colleagues over the last six months. We see that the things that we have done and that we are continuously doing are changing to the better, our performance.
Of course, it's frustrating when you see that the underlying performance of the operations is generating better orders, less costs, and all of that, but it hasn't filtered through into the real numbers yet. I'm trying not to be a negative person, but maybe that's my personality. Right now, I'm actually feeling a great deal of hope going into the fall. All the things that have been implemented and are being implemented are actually showing that if you work harder and more effectively, it actually gives effect. It's always a surprise in a rather strange way to many people. If you actually do a lot of things, that will give you some effect. I see that now. Unfortunately, it's frustrating that it hasn't filtered through into the numbers. That's maybe how I would reflect on the last quarter and the last six months.
All right, let's jump into the questions, then. The first email we got regarding the Q&A is from David, who is wondering which businesses have exposure to the U.S., what level exposure, and what is the impact of tariffs?
I think we touched on this subject before. We have three, four companies that have some sales directly to the U.S. It's very low numbers. The potential is great or huge, but since all these tariffs came into the discussion, we have paused or just idled those processes or projects. The potential for the future is huge for a few of our companies, but we will wait until the rulings and the tariffs are more stable so we know how they're going to affect and how they're going to hit different markets.
To give some more color on that, the three companies account for maybe 2%-3% of the revenue if you look at the U.S. piece. For one of them, I don't think that the tariff will be impacting at all volume-wise. For one of the companies, the sales absolutely have been impacted severely, but it's still a small percentage for that company and for the group. For the third company, it's something in between, but it's insignificant for the group, even though it's not fun, of course. Next question comes from Akash. He says, "Hi Dan, Johan, what sort of net debt/EBITDA level do you think is sustainable to operate at on a consistent basis? I know that your upper limit is 2.5x, but on a sustainable basis, I imagine it's lower."
I think we touched on this before as well, but I think if we can be around 2x or just below 2x, it would feel great. Of course, going through different development processes and stuff, that can alter it a little bit. We would hopefully be around 2x.
Yeah, on a long-term level, if we find a good acquisition that potentially would be a little bit larger, that would stretch that for short term, and that is, if that's a good bet, we will not keep to the 2.0x. Can you talk a little bit more about the addition of the three new subsidiary CEOs plus one Interim CEO in the context of improving operating performance?
We have a few new CEOs that look really promising. We have a couple of more coming in in a month or so. It seems to be really good people. Of course, when you do changes in companies on that level, it's going to have an impact. In this case, we see a very positive impact. Some of them have a lot of work with and a lot of struggle ahead of them, but the trend is looking good.
A question from Cristoforo on email. Dear Daniel and team, Cristoforo from Italy here, two questions. How do you assess the quality of the increased inventories and trade receivables just to be sure that counterparties will be good and cash collection is ensured? Let's start with the first question. We explained, I mean, the cash flow, the free cash flow ex acquisitions this quarter was very low, as you saw. We're not happy about that. A part of that is explained by that the inventory levels went up and that the sales actually went up for quite a bit of companies by the end of the quarter, which of course didn't really translate into actual cash yet, but trade receivables.
When it comes to the inventory part, looking at the companies that went up in inventory, we are very confident that it's companies that will actually be selling those inventory and translating that to profit and cash flow later this year. When it comes to the momentarily higher trade receivables for the companies that actually went up in sales, roughly half of that trade receivables have actually already hit our bank account as of today. For the rest, we're very confident that they will hit later in this quarter or sooner.
Yeah, in a situation where we have felt that we haven't performed well when it comes to gathering orders or receiving orders, we push that really hard, and of course that's going to lock up some of the working capital. Not fun, but also a natural course when we do what we do.
Yeah. Second part of the Cristoforo question is how the organizational changes will affect the subsidiaries and the decentralized model that you have always followed. What are the risks of losing the benefit of autonomy? You want to start?
No, please start.
I think it's a really, really good question. I mean, decentralization still is the heart and the center of our business model. Where I think that we have not done good enough, and to be honest, far from good enough, is that decentralization works when you have individuals that are doing the right things, that have autonomy to do the right things, but it's also people that have the capabilities and the ownership, feeling the ownership of doing the right things. If there is a person like that that is running the company in the right direction, autonomy is the right to go, and decentralization is the model.
However, when we see, and we are following this up more closely nowadays, when we see that operations are deteriorating, and we're not talking about the financial numbers, but rather more forward-looking indicators, in those cases, we need to be quicker to identify that as number one, and secondly, to ensure that the people that are running the companies are running in the right direction. It's really about trust, but verify. As long as the person is doing the right things, it is an autonomy. The more we feel that it's going in the wrong direction, in the first step, they need to explain to us why it's going in that direction that we feel is wrong. They also need to tell us the plan of righting the ship. If we believe in that, then we support that CEO fully in going in that direction, full steam ahead.
If we try that, or if we don't feel that they are having the right plan of righting the ship, then we get to a point where we basically have to draw up the map and say, "This is now your journey going forward. Please implement." If that is going in the right direction, then everyone is happy, and hopefully we all learn something. Without putting too many words on that, Cristoforo, I mean, decentralization and autonomy is really the way to go, but only if we feel that trust for the individual.
Yeah, and I think it's characteristic also that you talk about feel. When we feel that it goes in the right direction, it feels. Maybe we emphasize the done word a little bit too much historically because we have had the ability to handle the group when it was at a certain volume. Now that we are a little bit more companies and we are in several jurisdictions, we cannot feel that much. We actually have to see it. That's what we're measuring now. We have metrics that we actually look at and we follow up on the metrics and not so much on how we feel. I know that you meant that, but it's just how we phrase ourselves and what type of words we use. These subsidiaries should be autonomously run.
If they trend in the wrong direction and the metric shows that, then we have to demand from the subsidiary, "What are your actions that will be implemented to turn this ship around again?" If they are not, if the person put in place to be in charge of that doesn't have the equipment or the skill set to do that, then we have to support them and follow up on that very, very closely and much more faster than we have done previously.
Yeah, we feel in beta. All right, we got a question here from Prakhal Goyal, who's wondering, "Have economical conditions in Sweden deteriorated since we last spoke around the Q1 earnings? What is your outlook from here? Please frame the comments for investors who are not familiar with the Swedish market.
It actually has deteriorated a bit in some segments, especially some heavy industry segments. On the positive side, we actually see, at least if you want, and if you look hard for it, you can actually see that we have some new orders coming in when it comes to building houses and from the construction industry. It definitely has been a more difficult situation when it comes to heavy industry. Big global customers are hesitating and they have struggled with their order intake, which just zips down to us as well.
I think there's maybe two things to add to this. One part is that for some industries, absolutely, if you look at a one-year basis or two-year basis, the economy is down. Our companies are so, so small compared to the total that it should not impact one-to-one how we are doing. I mean, obviously, if you have a CEO that is just running the mill, yes, that will impact close to one-to-one. Our point is, and has always been, that when you're running something that is so small and where you're 1% of the market or even less, you just work a little bit harder, a little bit smarter, and then you take a little bit of market share and nothing has happened. We have CEOs in our group who work exactly like that. If you ask them, they cannot see that the industry and the market have deteriorated.
Even though all macro data is said up, they just don't feel it because they're pulling double the weight at the moment. That is something that we need to instill more in the group.
Very good.
We got an email from Alexi on email. Could you please share a bit about the synergy between your subsidiaries? Have there been any cases when one business significantly improved its margins or scales by adopting some ideas from another one?
It's a rather common thing nowadays since we have more companies, and the CEOs from the different companies get together a couple of times a year to tell their stories for each other and to get to know each other. Of course, there's a lot of what we call soft synergies there. I don't know if we're going to hard examples, but I have a few that I really, really like and where you get influenced and get the toolbox from a fellow CEO that you can implement into your own business and actually see the effects quite quick. Yes.
It's difficult to put numbers on it, but just to give two rather concrete things that we're working with. I mean, not a long time ago, we had 10- 15 companies. It was more difficult to find real interfaces where they had natural touchpoints that could make each other better rather than the soft ones that you mentioned. Nowadays, when we have roughly 35 different companies, they do have natural touchpoints where some of them sell to similar customers where they can open doors to each other. Some of them actually buy things that others are selling. We're seeing more and more of that. Right now, it's on a very insignificant level, but on some micro level, we do expect that to give some kind of synergy and effect and margin uplift.
I think the bigger effect going forward is that without adding a heavy overhead cost to it, we have many companies that have very similar functions. For example, every company, of course, buys something from someone. We have a lot of companies that are sourcing things from China, but obviously have not had the capacity to be best in class when it comes to that. We have many companies that work with marketing, but have done it with just a couple of hours a week and not really had the capability. We are looking at finding experts that can help us out and do this on an overarching basis. In the short term, save a little bit of money through not having as many external consultants. More importantly, we do believe that the impact of that will be rather big. Of course, that will take time.
Next question comes from Arnold through the email. He's wondering regarding the country managers for the U.K. and Sweden. Given the shift from Teqnion 's decentralized model, how do you plan for these managers to effectively oversee, especially the smaller subsidiaries? We've touched a little bit on that, but at least.
Yeah, yeah, but I think it's, I don't really know how to phrase it, but it's the normal way of operating, but we're going to do it on a more professional and more close level. When following up on different types of KPIs, we have always done that, but maybe we've been too slow, too soft when it comes to actually supporting and demanding from the individual subsidiary on how to change things around or making things better. Our slack has been too long, maybe in some cases. At this stage, we're putting in an organization where we will focus more on how right now, here and now, following up and demanding more or less a response from the person in charge, the responsible individual, the CEO of the subsidiary, to actually get from them an action plan taking us to a better place.
If that individual is not capable of producing such an action plan fast enough, then we will support them with that and make sure that they actually do the things necessary in order to take us to a good place. This is the role of these regional managers or country managers, and it's their responsibility to make sure that we find a way that is going to take us into the future much more healthier than we have been standing previously.
Yeah. We got a question here in the Q&A from Prakhal, who's writing that our free cash flow profile has deteriorated significantly. Why was that? Do you expect the pressures to ease, and what is your outlook for free cash flow going forward?
I think you explained that quite well just a few minutes ago. Just to emphasize, we are driving the activities really hard at this stage, and we've been doing that for a while. Of course, one big thing is to be really close to our customers and potential customers in order to make sure that we have the sales. That increase in sales, of course, is going to lock up some of the working capital and the free cash flow for a bit. In the long term, we have incentives for all subsidiary CEOs and also for ourselves that the free cash flow should be high. Otherwise, we won't get our bonuses. We have the toolbox on different levels in order to make sure that the free cash flow is what we are aiming for and what we're chasing. It's a fundamental piece of running a company like this.
It's on the top of our minds.
Yes. Email question from Akash. Hi, Johan and Dan, I have a few questions. Can you please speak in detail about the performance metrics you are implementing across your subsidiaries? What type of KPIs are you focused on? Who is responsible for ensuring these are implemented and tracked at subsidiary level?
On subsidiary level, it's always the subsidiary CEO that is responsible for making sure that they have good earnings and good free cash flow from that business. On the top of the KPIs that we always look for is, of course, the earnings for that subsidiary. We have the margins, the different margins, making sure that they trend in the right direction. We have a metric, which is a return on capital, which needs to be high enough. Otherwise, we make sure that we implement actions in order to restore everything to a level where we want to be.
Yeah, and that goes back a little bit to the decentralization and autonomy question. Basically, we have implemented five different KPIs on two profit levels, two margin levels, and one return on capital level for the different time perspectives. If everything looks good, feelings, but defined in Excel formulas, the CEO can run their company as if it was their own, with basically full autonomy, of course, following the CEO instructions and the board instructions. When one or more of these things becomes red, things get escalated from the country head in the U.K., CEO coaches in Sweden, up to here. There are different routines for handling that. That is something that we've implemented more clearly this year, which we, of course, believe will have effect going forward. Another question from Akash is, your net debt/EBITDA calculation includes lease liabilities in the net debt.
Is that the calculation used for debt covenant by lenders? Intuitively, a better measure of leverage would be net debt, excluding lease liabilities divided by EBITDA. I think one can have different opinions about this. Opinions, unfortunately, usually don't really matter so much when you speak to the rather rigid banks, even though we love our bank, SEB, very much. Covenant calculations are actually based on where the lease is included, and the potential earnouts for the future are also included. However, we use pro forma as the bank wants to see how things would be running at full speed with acquisitions for 12 months. That is what's in the covenants. A third question from Akash is, what are the learnings from the Reward Catering transaction? Please share what you can of the current status of Reward and the lawsuit.
Okay, a little bit of background. We have an acquisition in Ireland, and we are in a dispute with the sellers over an earnout. That turned into a court case, which is now put back to be settled between the parties according to the SPA. In the aftermath of or during that process, a couple of other legal cases have emerged, and the court has asked the parties to settle those cases in court and not in public. We will respect that and, of course, let the court take its time in those cases. Unfortunately, we cannot talk very much about it. It's a very, very, of course, strange situation to be in this. This is not a normal way of operating for us, but it is what it is, and I'm confident that the courts of Ireland will decide what is right and what is wrong.
Maybe important to add as well is that from our side, we, of course, have our solicitors involved. We also have certified advisors involved and also our auditors, so that whatever should and needs to be put into the different reports is put in there, and whatever should not be put in there is not in there. I have, of course, seen that some people that for some reason are very interested in the case have been writing about why there are no more disclosures and why we don't answer more publicly. It's because we're really just following the rules of the High Court in Ireland and local rules here in Sweden. When we have more to share, we will share that. Until then, we will just continue to follow the legal procedures.
Douglas through email is wondering, you mentioned on the fourth page that four companies have lost SEK 14 million during the first half of 2025, and you expect by the end of the year the group will instead contribute SEK 2 million-SEK 5 million. Can you please, I'm paraphrasing, but can you please give some more color on that? The four companies that Douglas is referring to are the ones that you can see in the middle of the whiteboard page, where you can see their order stock backlog per month. The companies have been losing money because there is, of course, a level of operational leverage in it, where with little revenue, of course, there's going to be a loss, but if you get to a certain stage, they start making money.
The good thing with these companies is that they are rather high gross margin businesses, which means that it doesn't need a lot of sales in order to break even, and after that, they start making quite a bit of money. The thing which is really frustrating is that from actually closing the deal to being able to produce and recording the sales and getting the cash flow, it's a long lead time. In this group, you have four different companies. Two of them are building-related, Hem1 and Grimstorps, where there are a lot of planning permits involved, which takes time. In Q4, we do believe that these companies will be positive, not by a lot, but by the SEK 2 million-SEK 5 million as we wrote on the whiteboard together.
That is not the level we expect these companies to operate on, but that is also due to the lead time and what we see in the backlog today, what we do believe is realistic because you actually need to start building things before you can record the revenue for them. Of course, going forward, we expect that number to be much higher. We've seen that numbers for those companies that are on much higher levels, and we, of course, are doing everything we can to get them to those numbers again and beyond. Another question from Colapan through mail. Hi, Johan, Daniel. Thank you for your transparency in the report. My question is, while quarterly updates are useful, as a long-term shareholder, I'm more focused on the operational trend and the underlying culture.
Are you satisfied with the current trajectory of key metrics this year, and how confident are you that this momentum is sustainable? Additionally, how are you fostering a culture of transparency and trust with the subsidiary CEOs, where they feel safe and share bad news early, yet empowered enough to operate without micromanagement?
Great question. Of course, when it comes to fostering a culture, it comes down to how we act, all through the company group, of course, how we interact, what type of relationship we build. It's extremely important that, as Daniel had touched upon several times during this call, we have the autonomy, we have the independence, but we also monitor it very closely and that we follow up on the metrics that actually mean something. Some individuals that run the subsidiaries are, of course, sometimes in need of support and help, and maybe they reach a level in their business where they've never been before, and they need to get some influence from outside, from us, from the team here on how to take it further.
The way we have been organized, just to be self-critical of myself, is that we haven't followed up close enough in a structured way and maybe a little bit in a, let's say, standardized way. That is the new role of the country managers that we will have. We will have metrics that we will all, that we will demand that we will follow all of us. Of course, one of those things is the transparency. It's very, very important that we have a full set of trust between us. The first thing that we want to hear from our colleagues and from our CEO coaches and from our subsidiary CEOs is the problems. Those are the ones that are going to be top of the agenda in every conversation.
I have a small anecdote from when Daniel followed me out to the subsidiaries the first time when he was fresh here in the beginning of 2021. We visited the Swedish subsidiaries, and one of the CEOs came running out to the parking lot when we arrived in our rental car and said, "Johan, I've been here all week. We miscalculated the earnings for last month, and this is why, and we'll be sitting all weekend." I remember Daniel was a little bit in shock in a positive way that the transparency was so high and that no one was trying to hide anything. On the contrary, they were actually shouting it out. That's, of course, the type of relationship and the culture that we want to nourish. How to achieve that? Talk about it, always be open about it, and always lead by example, of course.
Yeah, the last piece. I think also just going back to your question, if we're happy about the operational improvement, maybe the starting point is that we truly believe that when looking at the actual operations, the lowest point is behind us and that we're moving now in a trajectory that is upwards, which we're happy about, that it's upwards. Are we happy about the actual delta, about the speed, the momentum? No, we are not. We do believe that there is a lot more to be done. It's not that we feel that, okay, we have bottomed out, now let's go on vacation. We feel that we're going to use that energy and, of course, a little bit of happiness that we do feel that that is behind us and build on that momentum.
There's also a lot to be said about if we go back to the beginning of this year, we tried to explain in our heads how our business is looking. We have, roughly speaking, three different legs. We have one leg, which is acquisitions. We have one leg, which is companies that are actually performing, and we have one leg, which is companies that are not performing. Usually, you want to have a three-legged stool. In this case, we want two. We don't want to have a third piece, even though realistically it will always be there, but as a small, small leg. The acquisition piece, in the beginning of the year, we said that we're going to have a big acquisitive year and that we were going to buy more than six companies. We're at seven so far.
I do not feel that we're done yet without making any promises. When it comes to the companies that are performing and not, we don't have this normal distribution of most companies performing to the average. It's quite a bit in the opposite, actually, where we have a bunch of companies that are performing very well. The majority of them are in the U.K., but we also have some companies here in Sweden that are performing on that level as well, growing with 20% margins. We have this third group, which is not something that we like, companies that are losing money, which is really hurtful. As a group, they are moving in the right direction, but on individual levels, we do have some quick turnarounds, which we have shown also on the whiteboard, where the financial results are actually already seen and will improve even more going forward.
We also have some companies where they have plateaued out in the other direction, which is something not great, but as a group, they are moving in the right direction, but we feel too slowly. That was a lot of words, unnecessary.
Very true words, I think.
All right. Next question comes from Gunther on email. Can you please give some more details about the processes that will be installed to avoid acquiring a kākāpō or to avoid that an acquired company becomes a kākāpō?
Kākāpō. Someone that has been so acclimatized to a certain level of environment, so they forget how to work in another type of environment. I mean, the risk is always there. To acquire something in the short term is not that high of a risk because we are looking for companies that are growing a little bit and that have a very niche market where they are very good at what they're doing. They're the leader in their little narrow niche, and they have a very good history of doing that. Of course, every company that is growing will reach a level or leveling out on a plateau, as I mentioned before, where you're not used to, you maybe don't have the skill set or you don't have the experience on how to get away from that plateau, starting to climb again, climbing to higher altitudes.
That will probably happen to the subsidiaries, and as I mentioned earlier today, it also happened to Teqnion . It happens to Teqnion at several stages throughout our history. Now we've been in such a situation again, and now we're a bigger entity, which means that the impact will be bigger. I'm very happy and confident that we have found a lot of new tools that are necessary in order to proceed. I think the high risk of ending up in a kākāpō situation is if you hire someone from outside and you go into a subsidiary where maybe the founder or an entrepreneur has been running the show for many, many years or decades.
The risk there is not that high, but if you bring someone from the outside, taking them in, maybe you don't have the full skill set or what is necessary in order to make sure that you also do the things that are not obvious for this moment. Because becoming a kākāpō means that you do things that, or making sure that you don't become a kākāpō means that you do things that are maybe not necessary here and now, but will probably be extremely necessary for the future or tomorrow, and continue to practice those things and emphasize those things that will make sure that you have the full toolbox of taking the company into the future and having it grow forever.
I also think that we are an expensive lesson, but we are getting better and have sharpened our tools during this downturn. Two things that I also feel are important in addition to what Johan said are, one, to actually set the targets in the right way. We are more involved in the strategy phase of figuring out where the company should go, in which pace, and building that in a very, very realistic but achievable way and with concrete steps. We have some kind of baseline against where we're heading. Secondly, just as we mentioned a couple of times regarding the lead times from actually closing the sales and getting a sale on the whiteboard, the good and the bad is that for quite a bit of our companies, there is a lot of momentum in both directions.
When you start to build up the sales pipeline, there will be a lot of incoming things for a while, even if you stop, which we will not do again. The momentum is true in both directions. We have implemented KPIs and a structure where we actually follow up much closer because unfortunately, we saw some of the companies' operations deteriorating for a little bit too long until it hits the numbers, and we were too slow to react on those things for various reasons. I think being just much better at setting the targets, both on a financial level and also operational, what needs to be done, and then following up more tight when it comes to the forward-looking KPIs are things that we do believe will affect not becoming this stupid bird going forward. Next question from Gunther as well.
Are Grimstorps Byggkomponenter , Hem1, Markis City part of the group of turnarounds that I mentioned on page nine? The two building companies are. Markis City is not. Markis City is a business that strangely enough doesn't really have a backlog in the traditional meaning. Their numbers are always reported as zero when it comes to the backlog. What we can say is that it's also a company where we're putting a lot of effort at the moment, and we do feel that even though there's a lot of things left to be done, it is moving in the right direction. I think year to date, that company has made close to zero, which is like doing exactly nothing, which is not where we want to be, of course. That is roughly SEK 4 million better than last year, or SEK 4 million less poor than last year, but a lot more to be done.
Yeah, positive trend.
Yeah, yeah, exactly, from a low baseline.
Yeah.
Is the order backlog of SEK 69 million sufficient for these companies to become profitable in Q4, or is further growth needed for this?
I think you mentioned that already. It looks like they're going to make a small profit as of today. That is still something that we're not happy with, of course. They need to be much more profitable for the future, and that's also the aim for the CEOs and for us to make sure that that happens.
Yeah. Besides these four turnaround companies, are there any other companies that are losing money? If yes, can you indicate how many?
Yeah, we have a few more companies that are losing money. I don't know if we mentioned something about that in Q1 or the year-end report. It's approximately one-third of the group. I think we are about there.
Yeah.
Also, worth mentioning there is, of course, that the trend is showing that we're doing the right things and we're moving in the right direction. The idea that we will be able to report a much healthier group for the coming times.
Yeah. We have one more email coming in from Kip, who basically is wondering two things. How do you define organic growth, and when do you include an acquisition's contribution in the income statement? When it comes to organic growth, I think that we write something short about that on the last page. For simplicity, organic growth is when a company has been in our group more than 12 months. The 13th month, they start when they have a month to compare to, and that is when they are included for organic growth. When we include an acquisition's contribution to the income statement, this is when we have control, and control means when we actually have the deal done, signed, completed, and money sent, shares in our hands.
Accounting is tricky to do in the middle of the month, or actually, you can do it, but it's a lot of work. For simplicity, the companies get included the first, and basically, it is the first that is closest to usually the press release, which is very close to actually the completion date, usually the same day. Good. It has been very quiet in the live Q&A today, and it looks like we actually got through all of the mail questions with a few minutes to spare. Would you like to end with some concluding remarks?
Thank you so much for listening in, and please take with you that we have done a lot during this year, and we feel confident that our path forward looks much brighter. We have still a lot of things that we need to address and that we do take action to. I feel very confident when it comes to the new organization and how we're going to work together for the future. We have been on this plateau, nagging about that, but that's maybe something that we need to push through in order to be able to scale and double the group from today. It is with some positive feelings within that I say that the fall will show more improvements for us going forward, and we are still very, very much focused on doubling the EPS for Teqnion for every five years to come.
At least.
That is very important. At least, we still feel that the things that have been implemented and the things that we're actually achieving right now are very, very good. I hope that we will talk again in October.
Yeah.
Up until then, have a very good time and take care of the rest of the summer.
Thank you very much. Have a good day. Bye-bye.