Green Landscaping Group AB (publ) (GREEN) Earnings Call Transcript & Summary

This is the Capital Markets Day of Green Landscaping Group. Welcome. My name is Magnus Larsson, I'm heading the Investor Relations function. Over the next few hours, our management team, our new management team will treat you into the world of Green Landscaping Group and our business. You will also have the opportunity to meet briefly our incoming CFO, Marcus Holmström. There will be a possibility to ask questions at the end of the event. Option one is the webcast player, just type in question in the Q&A box below. You can type in your question at any time during the event. If you prefer to ask a verbal question, you can do so by calling into the telephone conference. Registration and dial-in numbers is available further down in the webcast player also. There are common themes to our presentation today, and they center around our investment case. Firstly, we act on a very attractive market, much more so than first meets the eye. And our CEO, Johan Nordstrom, will, during his session on the strategic direction, treat you more into that in just a couple of minutes. Secondly, we have, we believe, a fit-for-purpose business model. And this session is divided into 2 sections. One is the Chief Operating Officer. And the second is the Head of Lean, Daniel Linderståhl, who will tell you more about operational excellence. Last but not least, obviously, M&A being a cornerstone of our strategy, our new head of M&A, Sam Monsén, will let you in a little bit behind our curtains on that one. And with that, I welcome our CEO, Johan Nordstrom who's standing firmly rooted behind the coolest of tables that come from, yes, you guessed, the beautiful hands and minds of Ravenwood creations, one of our subsidiaries. Take it away, Johan.

Okay. Thank you very much, Magnus. This is quite an exciting day because this is our first Capital Markets Day ever. So we'll see how it's going to go. Magnus has been pushing for us to do this. And now we are finally here. In my part of the presentation, I'm going to cover the market and what makes the market specifics. To some extent, I will talk about the financial situation of the company as well. But in particular, I will focus on the journey and what we have achieved so far. And it's kind of amazing where we are because we are on the brink of becoming the industrial leader in our business in Europe. So it's quite a fascinating journey we are on. I have had the privilege to be the CEO of the company for the last 10 years. When I began, we had a revenue of about SEK 750 million and basically, we didn't make enough profit. Now we are at SEK 6.2 billion, and we do that between 8% and 9% EBITDA margin. So it's been a fantastic journey for the last 10 years. And I really like Mondays. So I have to say, it's the beginning of the work week and knowing that I have a full week ahead of me and continue the journey with Green Landscaping. That is really my passion and pleasure. So building the #1 company in Europe. When we look about the investment case, why should you invest in Green Landscaping? First of all, we are in a very attractive market. It's a very big market. It's a very stable market, and it's supported by several megatrends. So it grows consistently. And again, it's a big market. It's a good place to be in. Our fit-for-purpose business model is really borne out of the necessity going back 10 years in time when we were a centralized company. We didn't make any money, and we were forced to change. We had to come up with a new strategy in order to become successful. And then we have fine-tuned that strategy for almost 10 years by now. So we really know what works in this business, how can we create value for the customers, how can we increase our profit margins, how can we have loyal employees. And that all boils down to the business model that we have developed. And then, of course, in terms of investment case, when you are in a big marketplace and you really can add companies to the group investing in other businesses, that creates value in the long run for what we are doing. So the investment case per se is really about being in the market we are, have developed a very good strategy and then, of course, the possibility of doing value adding M&A activities. So what about the strategic direction for the company as such. So I will talk about the market and what type of megatrends you can see, cover a bit about the journey, what we have done so far, the financial performance, where are we, and then of course, where are we? We have an ambition of becoming the #1 in Europe, the industrial leader. And how far have we come on that path? But to begin with, when we talk about the Green Landscaping and who we are, being an entrepreneur really come close to our mind. We have 60 subsidiaries out there. Each one led out a very successful entrepreneur who knows their market, they know their companies, they know how to excel in what they are doing. So that's really important when you look upon it, we are also big owners in the management side of the company. So the entrepreneurial spirit and the way we act, the way we think is very important to us. And also, we have a very long-term view on our decision-making process. So it's not really about what are we going to do in the next quarter. When we make decisions, it's based on where do we want to be in 5 to 10 years. That's the horizon we have, and that is really what we mean about being entrepreneurs. Then in terms of what we actually are doing, that is, of course, the ground maintenance part of it, where we make the cities looking nice, clean, tidy and safe. And then we have the landscaping services where we actually do more of the digging part. That's a project-based business, main customers are typically local municipalities and local businesses. But the majority of our revenue goes into the public sector. That's where we are comfortable. The market per se, as I say, is a very attractive market, and that is because it's a big market, it's steady growth. You see low cyclicality. You can predict what's going on and we can plan our business in that marketplace. And of course, it's a very big market, and that enables us to position ourselves what type of services, what type of customers, where in the value chain do we see the advantage of us taking the position, what type of companies would we like to add into the group and being in a large marketplace really makes that possible. And then, of course, being in a market where you have 3 major megatrends, and that's what we are looking for as well. And that is the population growth, everything needs to be safe and secure. And then, of course, you have the climate change coming into effect. And those megatrends really supports the growth of the marketplace. So we like the market and where we are. Here, you can see example from the data from Sweden. So this is the public spending. And over the last 10, 15 years, there has been a steady growth of the spend from the municipality side of 4%. So even though you have recessions, you have whatever going on, our market is quite stable in that perspective. And that's why we like the market. It's fixed, stable, loan contracts. We know what's going on. We know how we can plan what's going on here. So even now when we had 4 -- 3, 4 last year that has been quite turmoil, we keep on steady with our performance given the market conditions. So that's one of the reasons why we like the market. And then, of course, our part of the total spend on the municipality side is quite a small proportion. It's not that big projects and stuff. And that means it's typically overlooked. So the budgets from the municipalities tend to remain the same. So low exposure, a 4% growth, we really like that market. As I said, being in a big market, and we have opened up 6 markets because we are active in 6 different countries. The latest one, we opened up, the big one was actually Germany, that is about 8x as big as Sweden. And it's really important that you are in a big marketplace when you want to make certain or take certain positions, you want to find the right companies, you have to be able to maneuver. As I said, in the value chain, where do you want to be? What type of customers do you want to have? And when you are in such a big market as we are, that gives us the freedom and the opportunity to take positions that we would like to have in the marketplace. So that's the advantage. And of course, if you want to do investing in other businesses, M&A activities, again, having a lot of companies to choose from, enables us to pick really the right companies that we want to invest in. So a big market is really important to us. Talking about megatrends. It might not see much that we have a population growth of 0.5%. We have the urban growth of another 1% but it's every year. So the population growth in the cities, together with urbanization means that our market in the cities grows by 1.5% every year. And again, independent of recession, independent of the economic climate the cities are growing, and that means our market is growing. And then if you look upon the equipment and the type of work we are doing, the focus and emphasize on building safe, secure and attractive outdoor area have gone up tremendously in the last 20, 30 years. In particular, if you look upon a playground that's on the picture, which we did it back in 1990, compare with what we are doing today, it's a significantly higher ticket to establish or build that type of equipment as well as a maintenance part of it and the safety inspection part of it. And all that is work we are providing with -- providing our customers with. And then the third big megatrends that we look upon. And this is -- could be the biggest one moving into the future. So what we have here is, of course, we talk about the climate change. And we see on the picture there, we have a heat map that's basically Paris, where the average temperature in the summer time have gone up by 2% to 4%. And that means that it's hazardous to the people who live in the cities. So the city of Paris have decided to construct 800 cool places in Paris itself, that means they're going to have water and trees built in order to tackle the increasing warmth in that area. Then we plant about 170,000 trees in just a few years coming ahead. And we see that trend going on in so many cities that you have this challenge that is getting warmer. And the same is actually with the flooding that it comes more rain, it's more concentrated. And of course, we have to do preventing the flooding, meaning that we have to make sure that when water strucks on hard surface you have to be able to evacuate the water. You have to have barriers so it can't cause the flooding. And then if you have had a flooding, then of course, we are engaged in the rebuild and the repair of that area. And the last one is really in the northern countries, where you have ad hoc snowstorms that create additional work for us because when you have a heavy snowstorm, the cities needs to function and that means we have to clear the cities from ice and snow. So those are really the 3 drivers we see here and all goes back to coping with the effects of the climate change. Talking about entry barriers. Being in the public sector and being able to tender is, to some extent, an increasing barriers as well. Because if you want to quote a new business in a major city, you have to make sure that you have the reference customers, you have to have the projects, you have to have all the qualification and you need to have the resources in place in order to do so. So there are barriers. The barriers differs between different cities or from city to city. It differs also from country to country, but there is an increasing trend, I would say, both in -- in particular in Norway and Germany, where we see that the barriers are going up and the public tendering processes are being changed, so to say, to our advantage, meaning that if you are a quality player, you know what you are doing, the likelihood of you being awarded that contract is actually becoming higher and higher. So is that to some extent, that reduces the price pressure. Now the journey of Green Landscaping. I touched about it that 10 years ago, we had a revenue of about SEK 750 million, and we weren't profitable. And we had a strategy that was geared towards centralization, economies of scale, cost effectiveness and that type of area. And we clearly saw that this is a local business. We can't have a centralized process telling the entrepreneurs, how they should be doing it. So I would say we spent from 2015 up to basically 2020. So the first 5 years was really changing the company. We went from the centralized to become a decentralized company, and we implemented that strategy quite forcefully in order to rebuild the company. And then from 2020 and onwards, we have really proven that the strategy and the business model works very effectively. We have the entrepreneurs who take care of the business, they do the work for their customers, they care for their employees, and they have an above industrial average profitability. And then if we prolong what we are doing as we enter Germany. Germany is the biggest market in Europe. And at this point of time, we are the market leader of the company who is driving the consolidation process in Germany as well. So our long-term goal, if you like, that has become the #1 player in Europe, and that should be like 3, 4, 5 years down the road, then we're going to really have that position. And also just showing the financial performance here. As we started out back in 2010, I came back -- come on board 2015, and then we started to implement the new strategy. And then it really took up in the year of 2020, 2021 in terms of revenue and the same with the profitability. So now basically, the industrial average profitability is 4.7% EBITDA and we are between 8.5% and 9%. So we basically had the double profitability, and we are also growing quite significantly. Now cash is king. And this is an asset-light business and we do generate a healthy cash flow. And it's about capital allocation. What do we want to do with the cash we generate. And so far, we are reinvesting the cash we generate into investing in new businesses. And that is about the M&A process that we have. So we use the cash we generate at this point of time to M&A activities, we buy new companies. And by that, we do increase our profitability in the future, and that's how we create shareholder value. The financial leverage. Right now, we have a goal of being at 2.5. We are at 2.7x. For us, this is actually an accelerated pedal. So we look upon how much cash do we generate, where are the financial leverage, which companies do we want to acquire. So if we feel that leverage is a bit too high, which I don't, because it's a very stable business. Then of course, we can, by default, use the cash to deleverage or we can actually increase the pace as well as we have headroom in the covenant. But we're at 2.7x. We have a goal of 2.5x. So we are pretty much on track. And in more particular, we are in control of that number. And Sam will talk about the value creation, but it's really value creating to us. We typically have a return on investment of 20% in what we are doing, given the multiples we are paying for them. Then there are 3 major considerations that you have to take into account when you look upon the M&A. First of all, it's about finding the quality companies, finding the entrepreneurs who want to be a part of Green Landscaping, who want to invest their future, their company into -- or becoming a part of our company and also having the values, the culture, we talk about business ethics, trustworthiness, that type of things where really, I would say, picky in terms of what companies do we actually choose to invest in. And of the vast majority of the companies we meet with, we basically choose not to do an investment. It has to be right on both parties. They have to be becoming part of Green Landscaping for the right reasons, and we would like them to be part of our future journey. Then the next question is about the capacity to integrate. When you talk about integration, we really don't look upon the cost side of it. We don't look upon how they do things in terms of having the right MRP systems or finance systems or whatever they are doing. We are here to support the subsidiaries in building great companies, we have met with hundreds upon hundreds of companies for the last few years. We have 60 companies within the group. And of course, we have a great knowledge on what it takes to run a business in this industry. What processes do you have internally? How do you do the quoting? How do you do the project management? How do you do the invoicing? We have that knowledge. So when we meet with an entrepreneur, we really look upon how can we improve that business moving into the future. And that is something we do together with the entrepreneur. So it's like an agreement, how fast do you want to grow? What can we -- how can we increase the profitability? It could be geographical expansion. It could be internal competencies they need to develop and then we have a handshake with them. That's what we refer to as integration, not the economies of scale or the cost synergies or the common processes with the whole corporation. It's down to the individual company. And then as a third bullet we actually talk about the financial capacity we have to do the acquisition per se. So all 3 of those are, let's say, consideration that we have when we do the pace of the M&A. So far a year ago, we actually took a step back, for instance, because we have high interest rate, we had a high inflation. It was uncertainty in the marketplace. And of course, then we took a step back and said let's take a bit careful, see what's going to happen with the margins, what's going to happen with the cash flow and so forth. And then as we saw, as expected, that we weren't that much impacted by the macroeconomic environment. we actually started to accelerate the M&A process again. So I think we've done 6, 7 investments this year. And on the average, we would like to do about 8 investments per year. That's the capacity we have. Now the financial targets, as I said, we have a target of growth of 10%. We are right now, I would say, quite low, it's 7%. We are typically quite higher, but that goes back to the slow pace we took the last year. Profit margin were at 8.4%. We have been on an increasing trend in terms of profitability for the last, I would say, 5, 6 years. And right now, it's actually hovering around 8.5%. We have initiatives in place in order to continue to improve the profit margin. So we do see possibility and a potential of increasing the margin we have. The financial leverage, 2.7%, I talked about that one. And then of course, we have a goal of 40% dividend. That was set when we did the IPO back in 2018. And to date, we haven't made any dividend because we actually believe that from a capital allocation perspective, it is significantly more valuable to our shareholders to reinvest the cash we generate into new businesses instead of doing dividends. So we haven't had any dividends so far. And then to sum it up in that case, really about Green Landscaping. We are in a very large market that is growing, it's not dramatically, but it's a steady growth. It's a low cyclicality. It's a very big market. And as I said, we grow with the business. I like when our subsidiaries grow with 4% to 10% and because it means they grow with the market. At the same time, they should have a profitability of 8% to 10%, meaning they should be more than twice as profitable as a market in the average. So being in the big market means we find the companies we want to join up with or invest in, we can be #1 on the money, for instance, depending on where you want to be in the value chain. So the big market serves us very, very well. If you are a roll-up company, and if you want to become the European champion in such a big market, that's a huge upside. In terms of the strategy of the business model, we have proven for the last 4, 5, 6 years that we have a strategy that works very well for us. We can sustain this profit margin that we have and we do it with the entrepreneurs who really are local business, people taking care of the customer on an everyday basis. And then, of course, this is supported by an active and, I would say, well proven. M&A activity as well. So we can increase the pace as we move into the future when the company is becoming bigger. But at this point of time, it's actually quite, I would say, successful. We are quite successful in our M&A activities. So all in all, we are the fastest-growing company given our size in Europe. We are by far the most profitable one. And as we are growing in Germany, that means that we, in the long run, actually will become the European champion, meaning the industrial leader in our segment in Europe. And I think that concludes my part of the presentation. So I'll hand it back to you, Magnus.

Thank you very much, Johan. Please join me over here.

Thank you.

So picking up where you left off with the European champion. If you look 5 or even 10 years ahead, what kind of Green Landscaping Group do you envision?

In terms of the segments we serve and the industry we are in, I do not foresee any major change in the strategy we are. We have a proven strategy, and we are in such a big market. And we really know how to behave and make money in this marketplace. We also have developed a playbook or what we refer to as Wayfarer. That is really the best practices and how we spread best practices among the subsidiaries. And by that, we can improve their operations. They can grow the profit, they can grow revenues well, of course, and serve the customers in a better way. And at this point of time, there's no need to step away from that particular strategy. It's a well thought out strategy. It serves us very well. So if we should wonder off into other sectors where we can't use our industrial knowledge. I really don't see that as a value-creating activities and that goes back to the very big and stable market we are in. So we can stay within the big market. Then of course, we will continue on the geographical expansion as we move into Germany. Germany will, in the coming 2, 3 years, become our biggest market, it will become like a new home market. I would like to say with it, at least in my opinion, as school book or a textbook example of how you do an entry into a new market. We spent 2 years understanding the marketplace. We learned German, we set up a new head office in Munich. So we really prepared ourselves and then we went into the market with our first acquisition, and then we're going to expand from, I would say, that company in Germany and then eventually, we're going to expand outside Germany. We're already in Switzerland. Of course, we are looking upon the German speaking, that is Austria and so forth. Eastern Germany will happen in not too far -- Europe will happen in not too far future. And then, of course, you have the neighboring countries, I would say, from Germany. So geographical expansion in the coming years is most likely to happen moving into new segments. Not in the scope for the coming 2, 3 years now.

Okay. So rapid expansion geographically, but stay put where we are currently in the service areas?

Yes. That's the whole market. We know how to do this, and we would like to use that knowledge and the playbook we have and then just forcefully deploy our strategy in new geographies.

Okay, very good. A completely different question. You've made changes to the management team for the first time almost, what was your thinking?

One could say it's long overdue. Again, going back when we started the company, it's a luxury to have the same colleagues for 10 years. It was really benefit -- it really benefited the company that we were quite close. We worked together for a long time. And that may enable us to make quick decisions. We knew the business, and we trust each other in a very good way. So we had -- that was the situation. But on the other hand, the requirement on the management team, if you're running a company that has SEK 750 million in revenue, and that is centralized because that's a starting point. And then all of a sudden, you are at SEK 6 billion in 6 countries with 60 subsidiaries. It's a totally different company to manage. And what we ended up doing is basically that, okay, we knew for the last 2 years that we have to change because the company has become too big, it's too complex, and we need to create another structure around it. But at the same time, we were quite successful, so we kept on going. And then when Carl-Fredrik decided to leave, that was kind of the turning point where we said, okay, now when he's leaving, then we have to have a discussion. So what happened was basically that I let -- had a discussion with Pierre, so he is moving into becoming a regional manager. And then Jakob is becoming the COO for the company. So he would be much closer on the regional managers and work much more closely with the companies individually. And then, of course, we took Daniel, who was a regional manager from Southern part in Sweden and done a very good work down there. We elevated him up to the management team and taking share of -- taking care of the Lean side and the playbook and the Wayfarer and develop that one into the next level on how to work with that one. And then, of course, as I moved -- we moved Jakob into the center of the company. We freed up Sam, who has been with the company for about 2 years, and he is now becoming the new Head of M&A. And then as I did mention Carl-Fredrik left, and that means that Marcus is coming on board as well. So I think we are building a new team, and I'm quite excited about working with the new team as well because the company have new requirements and having a new highly capable team coming into play will support the growth journey moving into the future. So it's not only building the team that we needed 1 year ago. It's about building the company or building a team that can support the company moving into the future.

It sounds like a really long-term planning.

It is. And that's -- we are big owners of the company, and we really like what we are doing. And of course, as I mentioned, our decision-making process is much more about what would the company look like in 5, 10 years into the future than to the next quarter. Then of course, I understand they have to serve the market with quarterly reports. But it's the decision we make today that really impacts where we are in 5 years from today. It's not next quarter, next quarter, those decisions we made 3, 4 years ago. So that's the thinking, and that's really how it works.

Thank you very much.

Thank you.

Johan will take a sip of water, and we will move into the center of the picture, meaning the fit-for-purpose business model. And starting off is our Chief Operating Officer, Jakob Korner.

So hi, everyone. My name is Jakob Korner, and I've been with the company for plus 10 years, as Johan said, I've been here almost since the beginning, since the company was born and learned so much during those years. The first one was kind of turnaround kind of years, and I learned a lot during those years. So that was really rewarding. I'm really thankful for those years. And then I've also been fortunate enough to held many different positions within Green. And I think that's another way to really get to know your company. So I really feel I got to know the heartbeat in the company, and I can say that I know our group today really well. So as Johan just said, I just recently got the role as COO. And before that, I was Head of M&A in the group for almost 5 years. And luckily, I can hand that over to Sam and looking forward to see what Sam will do in the years to come. But today then, I'm going to give you our view on our operating model. So it will be a lot about decentralization in the next 15 minutes or so. Okay. On this slide, you basically see all our subsidiaries. So it's between 50 and 60 companies, almost 60 companies, that is active in different markets, in different countries with local brands, local customers, local operation model and all the way. So this is the decentralized green. But decentralization has turned into some kind of buzz word for the last couple of years. So I'd like to dig in a little bit more deep into what it really means to us. And it could be both hard and easy to talk about. I mean the easy way to say it's full P&L with corresponding authorities and responsibilities. For our companies, it basically means that the choose their own customers. They choose project. They choose how to deliver. They choose how to follow up. They choose what kind of suppliers to work with, it's their castle. So our local MDs, they are the kings and queens in those castles. One could almost say that it's like our subsidiaries were owned by the local management team in the companies like it was their company. That gives you a little glimpse of what it's like at us. But on the other hand, I mean, 60 companies, it's full competition between our companies. When there's a possibility on the market that is like available for more than 1 subsidiary, we practice let the best man win philosophy. But of course, when a contract has been awarded, then we can collaborate between the units when there's win-win situations. But we never forced any companies to do that. So everyone is responsible for their own P&L. All the companies have local boards, but that is basically where the elevator reaches the top floor regarding operational issues. So everything is sold within the companies, taking care of customers, employees and other stakeholders in the way they want to do it. So these 60 different companies shown on the slide here, it also means 60 different corporate cultures, and that is more than fine to us because at the end of the day, it's that specific corporate culture that is making the company what they are and as profitable as they are both now and going into the future. So one can say, there's not one Green culture. There are many different Green culture. But there is a big Green umbrella, and that is what is uniting us all. And that is the fact that we have chosen each other when the company is entering the group based on the fact that we share the same values in business and in life, for that matter. And those are values like decency and trust and performance and that are things that we cherish a lot. So what does this mean for the central functions of Green Landscaping Group and headquarters? Well, first of all, you should say that 99% of the total headcount, all our employees within the group are hired inside the local companies. So our HQ is actually really, really lean. And that is by design. That's the way we would like it to be. And basically because of 2 reasons. Number one, is that our subsidiaries they'll have to cope up with the cost level. So we cannot make that unacceptable. And the other 1 is that when growing the supporting staff. We know that, that per se drives bureaucracy and bureaucracy that is something that our subsidiaries definitely not need. So today then, Green Group, it's like a big network of entrepreneurs across Europe. In this network, there's like no straight line or chain of command, but more of a system where all the nodes or companies in this example, no company is in control over the other one. But it's more like a network where information can flow freely between all companies. And I would say that, that is how a big part of the learning and best practices taking place in the group at the moment. And therefore, one of the biggest reasons that we now, during a couple of years, actually, have been performing an EBITDA margin that is significantly above average in our industry. But why did this model work so well to us? Well, there are several reasons, and I highlighted a couple of them on this slide. Starting off in the top with change and a new chapter. I mean asking the question, why do we acquire the companies that we do. Because there's a lot of companies out there. And I would first like to say, I believe Johan said it as well that for every company that we acquire, we say no to like 5 others. But the reason that any company is being sold is basically that there is a seller on that company that is looking for some kind of change. And that change could be many different things. But what we are aiming for and looking for in the sellers is when that desired change is to be part of something else, to get a new spark, to get a new impulse. There is, of course, and you shouldn't neglect it a big element of capitalizing on the value that they have created during the years. But it's not only that. Being an entrepreneur in this industry, it's like a lifestyle. And we believe that we can offer like the best out of 2 worlds, capitalizing, of course, and bring down financial risk for the entrepreneurs, for the sellers, but at the same time, letting them do what they do best and like best, doing business, in building their customers, which they are so proud of and taking care of their employees and customers. And the fact that our system allows the sellers or entrepreneurs to continue as before almost. But now together with like-minded and doing that under a new umbrella is been proven to be a really valid reason for our success. Second bullet. So let's talk about commitment to a local brand or to a local culture. I would say in an average company of ours, they got a turnover of around EUR 10 million and got around 50 employees inside it. And I would say that these 50 employees, they are often far more proud to say that they are part of a local well-known brand compared to saying that they are a part of Green Landscaping Group. And do we feel sorry for that? Well, not at all. The commitment to a local brand. I mean, it increases the possibility to influence the future of your company and your own workplace and your own personal development for that sake in a very good way. And the commitment to a local brand, it's also making our companies more agile and definitely more willing to change and react and adopt to changes in the local market. Last but not least, the decentralized model is truly a transparency driver. I mean it goes back to the power of authorities and responsibilities. There's nothing to hide behind. I mean, the result is generated not because they are centrally been given instructions or regulations or a bad result is not generated because we put restraints on our entrepreneurs, telling them what to do or what system to use, customers or suppliers or whatever it is. Now it's up to our individual MDs, and that is really inspiring for the right individuals. One should say that this might not be universal. So I don't believe the model is for everyone. So both when we are hiring like recruiting a new MD or key employee or for that sake, when we are acquiring companies, it's super important for us to stay true to our values and really looking for the right kind of individuals that are on a general note, motivated by this decentralized system where there is nothing to hide behind. There is another reason, and that's more like industry logic, actually, why it's so important to stay decentralized within our industry. And that is because the fact that our customers are local. So what does that mean then? Well, our company's customers is often a local municipality, and this is regardless if it's maintenance or a landscaping project. Not that municipality per se, it's a relatively small organization with local needs and local agendas and should not, in this meaning be seen upon as a big customer group, broader like many, many, many small individual customers with different needs that -- not that rarely with different views on quality. A big part of the quality experience of our customers is based on the local customers' definition of quality. That's why we have to stay really close. So you can put it the other way around and say, our customers are not nationwide or worldwide construction companies or other industries, so we do not have to streamline the quality over a bigger geography. We doesn't either have to like move our operational capacity far from our basis. It's the other way around. And we can, therefore, give our customers a continuous service with the people and that our customers really appreciate and believe that is delivering quality for them. A quick example, just to emphasize this is, in our industry, there's a lot of standards, and they could be really tough from time to time. One of many -- one out of many quality parameters in a maintenance contract for us could be like the city center park in this municipality should look really nice and tidy. But what does that mean for our customer? I mean define nice and tidy, the answer again is that the definition differs from customer to customer. And that's why we should stay local and decentralized to really meet and understand what quality is for each and every customer. Okay. Moving on. Why did we choose a decentralized model at the first place because this is not something that would just happen to end up with, Johan talked a little bit about it earlier, and I'm not going to say too long around the history here, but it is important to understand that we were once a super centralized company with common processes, one brand strategy, suppliers, how to operate, how to govern, how to bid, et cetera, et cetera. And it didn't work at all for us actually. You could say that we were caught up, we presented on this slide by the Gordian Knot, we were caught up in an internally created world with a lot of rules and processes how to do things and what not to do and policies and stuff like that. And it turned out that our operating model was actually preventing us and preventing our entrepreneurs to do what they actually did best. So after a couple of years, many years ago, but still worked a lot to figure this one out. But at the end, we eventually took up and raised our big acts and chopped the Gordian Knot into pieces, just to simplify and to clarify authorities and responsibility and what it means to be a P&L owner. And this is something that we have worked a lot about -- a lot with ever since and up until this day, we're still talking a lot about it. We're still aware and we learned a lot from the history, but we are basically still allergic to initiatives that strives to any kind of centralization. And the history gave us really good antennas in this matter. So we're trying to detect initiatives that is putting our operating model in the wrong direction going into the future. But ever since we untied the knot, our new model has served us very, very well. Okay. So how to develop our model because even though we found a model and we like it really, really, really much, we definitely believe we have to make it better, make it stronger, improve and fine-tune and there's a couple of things that I want to talk about regarding how we see the operating model going into the future. The first one, starting from left, is that our network and networks in general, is getting stronger by numbers. I mean the more entrepreneurs, more strong companies that we become inside our network, the better we will become because it increases redundancy. It decreases the amount of information and learnings and best practice that is flowing around in this network between our companies. So to improve the decentralized model growing is of importance. Secondly, improving our governance vehicle because you need a vehicle or a system or some kind of process to govern a company. Our vehicle is called Wayfarer and it handles things like how to work with monthly reporting, business reviews, best practice, strategy planning, definitely, et cetera, et cetera. And Wayfarer is born actually out of two different streams. The first one is the Danaher business system, which is a really powerful system that we worked a lot with and used in many companies and on Green Group for that sake in -- during many years. But the second stream is basically all the knowledge that we have acquired during the years we've been in these industries. Johan said it earlier, and I would say that we met almost thousands of entrepreneurs in this business during the last couple of years. We met big ones, small ones, companies that are early in their development, company that's been there for a long time, maintenance companies, landscaping companies, et cetera. And through all these meetings, we have learned a lot. And today, it's actually so that we can see a pattern in what -- pattern, what differs the company that is really succeeding for the one that is not so successful. And this information is used to put in to our vehicle to our Wayfarer, to eventually make our companies even better. Daniel, who is coming up after me, I believe, will tell you more about this in a while. But to improve the model, we have to improve our vehicle. Okay. Number three, I was in this area, a couple of slides ago, it's about being guardians of the centralized model and fine-tuning it. Because I would say that the natural state of most human being is to centralize only with good intentions, but in a way, it makes sense let's solve things together. Let's reduce cost together. Let's set up a common company somewhere in our geography, where we like increase the efficiency and the time that our machines are rolling inside our system. There are so many ways. It could be about purchasing, bidding or systems. But this is an area where we are trying to use our antennas and to not go the centralized way because we do not want another Gordian Knot into our system. But going into the future, we've been a little bit from time to time careful about guiding people too hard about our learnings because we don't want to show the creativity in the individuals, but I think we can improve how we use our antennas going into the future. So to improve let's sharpen our antennas even more. Okay. Last but least -- last but not least, definitely not least, actually because this is maybe the most important area for us to improve going into the future. And that is when enough is enough. And before talking about that, one should say that we are an industry player. We know that this is business and that 3 really good years could be followed by 2 years that are not so successful before they are bouncing back. We also understand that even though our model is really resilient to changes in the market, it still affect us. So local ups and downs, it is what to expect. The question I want to address here, it's not about that, but more about identifying when there are underlying issues in our companies that drives business in the wrong direction and act on that information much faster than we have done historically. I mean, if you put like 50 or -- now we're almost 60, and in the future, 100 companies next to each other, it's pretty natural to say that there are top performers and low performers. And our group is basically a group of really successful entrepreneurs and our local entrepreneurs, our local MD, they expect from us to act on the low-performing units. And we are from now on addressing this in a quite more structured way, at least compared to how we've done it in the past. And I believe this is the main thing for us going into the future and transform Green Landscaping Group from really good to great and becoming that European champion. So I believe that was all for me, Magnus.

Thank you very much, Jakob, and welcome over to my desk.

Thank you.

This may come across as a bit odd considering what you just talked about in the past 30 minutes, but I've basically been with the company since it was born, I think you said literally, with that under your belt, isn't it tempting to just go and tell a low-performing unit, what to do and how to do it?

Yes, it really is. It really is. But again, we learned the hard way that, key is to have people around who act, who are action-orientated and by telling people what to do, that is basically shifting that dynamics 180 degrees. So we're trying to stay away as much as possible.

So although it's tempting, you try to restrain yourself?

Yes.

Okay, very good. So we have grown -- another subject. We have grown the company a lot in the last few years and our plans for the future are quite aggressive as well. What kind of challenges does that posed from a governing perspective?

Regarding governance per se, I mean that's -- for me, it's a span of control things. So I don't see any problems regarding that about our growth going into the future. And I know Sam is now in charge for a brilliant M&A team. So I'm really, really certain that we can bring the really, really best companies out there into our group. So maybe the challenge is more on the back end of our system, how to integrate, how to take care of these entrepreneurs and companies that will enter the group in the next couple of years. Because even though we are decentralized, it's a lot of work after a transaction, taking care of onboarding, culturally onboarding and making sure that the entrepreneurs are enjoying life inside Green Landscaping Group.

Very good. Very good. Thank you very much, Jakob. We will now take a break before we continue. So fill up those coffee cups, and we'll see you in a bit. [Break]

Welcome back. So you've heard Jakob Korner, talk about half of our session on the fit-for-purpose business model. And following now comes the way that we act in operational excellence by Daniel Linderståhl. Go ahead, Daniel.

Well, thank you very much, Magnus. We are talking about operations excellence. So let's talk a little bit about myself then. Well, I have my background in operations. I've been working with operations for my whole and entire career. I started out as an electromechanical engineer within the armed forces in Sweden. And after that, a few years, within the elevator industry, and joined this industry 12 years ago in 2012. I actually started out in a company that is now a subsidiary, which is Svensk Markservice. And in 2018, actually in December, I joined Green after the acquisition was done and hold the position as the manager for South of Sweden until just recently. The last few years, I've been working with the transition of Green and Svensk Markservice to be independent subsidiaries. We have transformed them to local companies. And we also done a turnaround, both in revenue-wise for some time and also in the earnings specifically in the earnings. And I also had a lot to do with the acquisitions in the South of Sweden for few years. So I think I know our business and our companies, at least in Sweden, for some years and in a good way. So let's talk about making good companies even better than today. We have 3 headings. The first one is learning from the best, where we have within our companies, we have a very high level of expertise, both Johan and Jakob was talking about our entrepreneurs, and they have been in the industry for a very long time. And we know that they have a lot to share and so on. So they know what it takes. So we will talk about learning a bit. We will also talk about turning goals true. How can we make a strategy within our decentralized group and make it true? How can we be better within the group? How can the strategy in local companies help us? And in the end, we will talk about digitalization. What will come. And this is also an area that need a lot of very high expertise. So this is an area that is very good for us as a group. As you can see here, we have -- on the right, we have all our companies plotted in graph. And as you can see, we have a lot of companies that are way beyond the industry average. And of course, we have some of the companies who are also under the industry average. What we want to do is to be best-in-class in every company, of course, and what we are trying to do is to make every company, every day a little better than they actually are today. even the best can be a little bit better. And the one at the bottom, they can definitely increase a lot and be a lot better than they are today. So how will we do this? Well, we have been talking about Wayfarer. And during 2023, we started up the initiative called Wayfarer. And this is both about learning and about implementing strategies in companies. So during 2023, we started to gather the information from our very good companies and took that into an embryo at least to a playbook to see how could we find the essence of every company that are really, really doing good, how can we put that into something that we could share and take along, along the journey. And at the same time, we created and developed our own system to do this based on the Danaher business system. So the building block we have been focusing on and that we can see that are kind of connecting all their good companies. It's about company culture, leadership, how do you lead the company? How do you think about culture? How do you live your day-to-day business, so on. It's how you organize your company. How do you work with P&L and so on and so on within the companies. How do you work with the revenue growth? How do you make sure that you have the revenue, you need to be a good company and of course, the profitability. And all of this, we need to be in a decentralized way because we will protect the decentralized structure within our group. So we always have to be very sure that everything we do is from a kind of pull system, not push. So when we know this about 2023, we put it together in kind of this embryo. And during 2024, we had a take off. So we have done workshops with a few of our companies where we have been talking about both strategy and what we have learned, we have discussions with every company, how do they do, could they do in another way, what would they like to adopt or what would they like to discard because everything that fits one company definitely will not fit another one. So it's all about finding the key essence that is good for you. So that's about what we have been doing this year. And further on from 2025 and beyond, we will be focusing on the next step, let's say, how could we develop this system even more from where we are today, that's one way of learning. The other way, a very thoughtful way is to meet. We have some of the best entrepreneurs in the world, and they like to meet. Many of them have actively chosen to be part of Green. And one thing that we can offer them is knowledge. And meetings with other MDs all over Europe or at least in your local area. So we have local networks with MD. They look different if you are in Sweden or in Germany or Norway, it look different, but we're talking about almost the same thing. We are talking about issues that you have, how you can solve your issues, how other MDs have solved similar issues, how you can share knowledge, how you can learn, how you can gain inspiration from others to expand your business or make the profitability even better than it is today. So some meetings is a very essential and very important thing for us. We also have, once a year, we have a group-wide conference, where we gather all our MDs and another key personnel from subsidiaries and from headquarters to meet. And the goal and the aim for this meeting is to broaden the view, to have a forward-looking way. We're always looking forward to what is the next step. What can we do now? What possibilities do we have? How will the market look like ahead and so on and so on. And the maybe most effective way to learn within our group is to go and see by yourself. And if you know others, if you know a very good company, that you know they have solved your problem in a very good way. If you go and see and how they have implemented, how they use, what they know, how they do, you can probably learn a lot and you can implement that in your company as well. So one of the most important things to learn is to go and see it by yourself. So turning high ambition through and strategy deployment. Well, there is a saying that culture eats strategy for breakfast and we can really sign on to that as well. But strategy can definitely help you. If you have your culture in place, the strategy can help you go even further in a faster way. And we have 2 different methods to do this working with strategy. Both are parts of the Wayfarer system. One is our own system to where is -- there is a part of Danaher business. And then we have the full Danaher businesses in some of our subsidiaries that we call our strategy deployment process. And we can see that using either tool, this is an effective way to implement strategy and to make things actually happen, not only to have the strategy, that's not too hard to make a strategy, the hard thing is to make it happen in reality. And that's where the tools help us. And we have, to the right, you have the old legacy, 18, which is actually the units from former Svensk Markservice and Green Landscaping. Over the years, and as you can see, we have a very high rate of margin the last couple of years. And this is from my perspective, anyway, definitely due to one of our most crucial things to decentralization, which was part of the strategy implemented during 2019 to '21 and beyond that as well. But the main job was between '19 to '21. And now, we can see that, that strategy is really working and that the companies are improving their margin in a great way. So let's see what happened, but we know that this really works. So let's talk about digitalization then and new ways to perform. Digitalization is driven out of many ways, of course, in our industry, we can see that our customers, they are beginning to want something that they didn't want yesterday. They want increased quality. We can see that the quality demands are much higher. They want the most faster delivery, kind of just in time, they don't want to wait for our delivery. They want it done now. And they also want to be much closer and the dialogue with the customers are much more needed in the future. And also, the customers want to have a much more close follow-up on what we do. So this bring us that we have some advantages in this and as a big and large player within the industry, we have the means to meet the customers' demands. So we have a great advantage in being big because doing the digitalization and meet the customer demands need some investments, need high level of expertise. And this is also a thing that takes time to build systems that every company in a decentralized environment can and want to use, to again, we are back at a pull system, not a push system. It takes some time to build and to adopt them and to learn. But in the end, I think we will see a great impact on our companies. And this is also one of our very few central initiatives who are within the group, because of the heavy investment that a small company will have rather hard time to take and do the investment. This also creates barriers in the end to enter the market because our customers, the public, never the least, the public customers, they will set a standard that will need much more expertise and much more digitalization than the industry, in general, have today. So in the end, we will know much more in a few years, what the customers want, when they need it, and we can deliver it just in time. So how will we do this then? Well, we have a few new tools, quite a lot of new tools. The industry is kind of old. We're doing the same thing today almost that we did 50, maybe 70 years ago using almost the same tools. They look a little bit different, but it's more or less the same. In the future, we will be able to foresee the customers' needs even before the customer knows they have the need. When we use and combine the information from sensors, robotics, drones, weather applications, the voice of the customer, the voice of the user and so on and so on, combined it with event calendars and historical data we will actually be able to predict what the customer's needs. They had a week ago, a month before they actually want it done. So that's something we're really looking forward to and we are slowly building and going in that direction. This also, of course, makes it much more important for us to have a high level of expertise. That's why we have this as a central initiative because we have some really, really good guys working with the digitalization on a daily basis. Very close to the companies where we can see that the companies are actually time after time, they are pulling more and more effort into this, and they need more systems. They want to be better. So well, how will this affect our companies, our local companies? Well, they also need to increase the capacity for new things, for sensors and robotics and so on. And they will need a higher digital skill to be able to maintain equipment and the know-how to take all the data and make something good of it because in the end, we will have persons who will go from one place to another and take care of the customers' needs. That would be the end. But we will do that in a much more customer-centric way. So I think that's about to conclude what I have to say about strategy deployment learning and digitalization. So over to you, Magnus.

Thank you very much, Daniel, move over to me, please.

Yes.

So many companies talk about operational excellence, but getting the results is the difficult thing. What is it that makes you confident that we can sort of do this?

Well, I think what we have learned so far is -- okay, we can always look at the EBITA margin. So that's a proof per se. We can see that the margins are rising. We also know that people do learn, they do be better. We have our local boards and regional managers. So I'm very, very close to the company, working together with the company to make sure that they are making better to make the MD even better than they perhaps are today.

Okay. Very good. What systems do we have in use? Or do you have in use to track the performance of a company that has gone through the Wayfarer process, for instance?

Well, I would say we don't measure that in a regular basis on like a weekly, monthly or so because that's up to -- maybe it's up to the Board and to the regional manager. But on a central level, we follow the long-term development of EBITA.

Meaning that you actually look at the monthly financial reporting. So there is no system.

Maybe, not even the monthly, but we're looking easily for a long run. So it's -- over time, the development of the EBITA is actually the best way to know if we are being successful within the company.

So there is no IT system called Wayfarer or something?

No.

Okay. Very good. Thank you very much, Daniel. Good. Let's move on and let our new Head of M&A tell us about what he and his team are up to and why. Welcome, Sam.

All right. Thank you very much, Magnus. So to begin with, I would like to say that it's a pleasure and an absolute privilege to stand up here and talk to you all today. My name is Sam Monsén, and I am the Head of M&A here at Green Landscaping Group since 3 months back. I joined this excellent company in 2022. So I've been at Green Landscaping Group for 2.5 years. And prior to joining Green Landscaping, I was at Ericsson and PwC working with various M&A questions. So essentially, I've been working within M&A, my entire career. But let's get a move on and look at how we do M&A at Green Landscaping Group specifically. And what I would like to begin to talk about is our 4 routes to making investments, right? And I would like to start talking about the simplest approach, right? And that is when a seller gives a call to myself or somebody at the M&A team directly asking us if we would be interested in investing in their company. I would -- my hope is that this happens a lot more in the future. Unfortunately, since joining Green Landscaping Group, it's only happened once. If it happens more often, my job would be a lot easier. Another route that we utilize, but we don't rely too heavily upon is to be engaged by M&A sell-side advisers or so-called brokers. And there are basically 2 different approaches that can be taken here. The first one is when you have an exclusive process being that you are the only participant in the process. So that is the model that we like to prefer or like to use. And we always try our hardest when we get contacted by an M&A adviser to use this route because it means that you can have more in-depth and thorough discussions with the entrepreneur about the reason for selling their company and their motivation as to why they want to join Green Landscaping Group. And there are so many different options available to them. The second route that can be taken here is that you are invited into a more structured process or a competitive bidding process. And this, we try to avoid because in these cases, you are severely limited in the amount of time you get to spend with the entrepreneur due to time constraints basically. And also there is time and time again, some censorship going on from the sell-side adviser as to what questions you can ask the entrepreneur. All right. But what we prefer to do instead is do our own work. And as Johan mentioned earlier, I mean, it's about doing a thorough analysis before entering a new market. So we rely heavily upon doing our own research or desktop research, where we look at how big a market is, how many companies are active there, who are sort of the well-respected entrepreneurs in each region, right? And we call those the lighthouse entrepreneurs, the ones that are well respected by everybody in the country or a region, right? And those are the ones that we try to find before sort of deciding going into a new market. This is what we did in Norway, Germany and Finland. But once we sort of collected the data, you have a long list of potential candidates that you would like to sit down and have a discussion with. And once you have that long list, it's basically a question of getting boots on the ground. It's a volume game, right? You have to get out there, talk to as many people as possible and get an understanding of who are the people that we align with in terms of values and visions for the future. And as I said, once we find that sort of lighthouse entrepreneur and everything clicks, we want to move very fast to partner up because once that lighthouse entrepreneur is onboard, what we want to do is to rely on them to help us when looking at other potential candidates in their region, right? So we use our vast entrepreneurial network that we have. We are around 50, 60 top-tier entrepreneurs in our group that know the industry and sort of know which ones are the top players, they know what companies do things differently and have some sort of secret sauce that they utilize fully, right? And essentially, they know which entrepreneurs they would want to have as colleagues in the group. And that's what it's all about. So when working with M&A, we want to involve our entrepreneurs as much as possible in the process essentially. And what that means is that we want our entrepreneurs to meet potential candidate, not once, but multiple times throughout the process. So those are different routes to sort of engaging with potential companies. And once we have sort of established contact, it's about digging into the company themselves, and what we typically have and what we use in these processes are a big list of investment criterias where we tick off boxes basically on what we want to see. And this can be summarized in 3 main areas: financial performance, strategy and culture. And if we start with financial performance, what we want to see is, obviously, that the company has a proven track record of stable revenue earnings and then also EBIT margins above 10%, and those are also stable over time. So we want to see the company growing with the market 4% to 10%, as Johan mentioned earlier, and we want to see EBIT be above 10% and not fluctuate too much, right? So we don't want to see that a company is going from 5% to 10% to 2% to 15%. We want it to be stable essentially, right? And then we also look on the size of the company. So the range that we look at is from SEK 50 million to SEK 300 million. If you go below that range, what we see is that you often find that the company has some sort of personal dependency risk where it's usually the CEO that the company is very dependent on. And if you go above that range, we see that the companies obviously are a little bit bigger and for that reason, not as agile as smaller companies, and this tends to show in their profitability margins. If we move on to strategy then. I mean what we tried to dig into is to ensure that the company has some sort of secret sauce or a unique selling point, which they exploit to create a local competitive advantage in their local market, essentially making them a lot better than their competitors. Secondly, we want our companies to be number one on the money. And what I mean by that is to -- we don't want our companies to be too reliant on bigger construction companies as subcontractors. Rather, we want our companies to own the contract with the end customers directly. Thirdly, here at Green Landscaping Group, we like the public sector. So we want our companies to have a high exposure towards customers such as municipalities or state-run enterprises. Then lastly, culture. So we've acquired around 50 companies as of today. And we believe that we have a well-proven model for finding good companies and distinguishing good companies from bad companies. And most of the times, we have discussions with companies that tick all of the investment criterias or most of our investment criterias. And when we have those cases, it's all about the person behind the company, right, the entrepreneur. So we want to make sure that we have cultural alignment there. And what that means is to be very upfront in the beginning to understand the seller's intent behind selling the company. And number two, understand why the seller wants to sell to Green Landscaping Group specifically. We also want to make sure that the seller fits into our group of entrepreneurs in the region where they are active. And that's important because every new company that we bring into the group. We want to make sure that they align with sort of our all-encompassing guiding principle that we have at Green Landscaping Group, which is essentially that we are decent people making decent money in a decent way. Right. So moving on then to post investment performance. So how do the comp is fare after they've joined Green Landscaping Group. And I would like to start off by saying that for the majority of those 50 companies that we've invested in so far. Most of those have been invested into more recently, so the last 2 to 3 years, which means that we don't have a lot of historical data to distinguish real hard trends on. However, for the companies that we've owned for a longer time period, there are certain trends that we can see. The first one being that revenue tends to grow a lot faster than what we initially expected when making the investment. Secondly, is that EBIT growth as well, but it doesn't grow as fast as revenue. Thirdly, what we see in the data is that companies that had that stability, I was talking about, where they had a stable revenue growth and stable EBIT margin above 10%, those companies tend to perform in a similar fashion post investment. And then lastly, companies that do not have that sort of stability where EBIT margin fluctuates or revenue fluctuates too much. Those companies tend to perform worse when part of Green Landscaping Group. And those companies are unfortunately difficult to turn around, we found. So it goes without saying that if we buy quality, we won't have these types of issues going forward. All right. Some other key learnings that I would like to talk about from data is that obviously historical performance is a great indicator for quality. I mean, in this industry, you can't cheat your way to success over time. And what we also see is that great company culture shows in the results. And thirdly, companies that have a clearly defined sales strategy and operating model, they tend to perform better than the companies that lack those clearly distinguished strategy that they exploit. And then fourthly, companies that are recommended by our own entrepreneurs tend to perform a lot better than the companies that come in via other routes. And then lastly, personal life situation, of course, matters when selling your company. And one clear example that I have is the age of the entrepreneur when selling their company. I mean the intent for selling your company is vastly different when you are 30 to 35 versus if you are 50 to 55, and you have spent your entire working life within the landscaping industry. All right. So the M&A agenda going forward, right? So as I said, we believe that we found our model for how to find good companies versus bad companies within this industry. We know this niche quite well. So we are not going to change our investment criteria going forward. Rather, it's about increasing the geographic scope that we look at, and with that said, what that means specifically is that we will be quite aggressive in our focus on the DACH region here in Europe, so that is Germany, Switzerland and Austria. And in Germany, specifically, we want to focus on establishing clusters around our platform companies that we already have in the German market. Secondly, we want to be very active in the Baltics to ensure that we find an excellent sister company to our extraordinary well-run company that we have in Lithuania, in Vilnius called Stebule. And then lastly, we want to continue to be opportunistic in the Nordics. Pace wise, what we see right now, there won't be any difference in the average pace that we will have going forward compared to the pace that we had previously. So our goal as an M&A is to make 8 to 10 acquisitions per year. And we can adjust this pace if need be, if macroeconomic factors change or financial questions come into play. And I believe with that said, that's it for my time. So thank you very much for listening in, and I look forward to taking your questions later on. Thank you.

Well, thank you, Sam. Move over to my desk, please. Yes, you may look young, but you've got a surprisingly many years of M&A experience, from various roles in various industries and sectors as well. What would you say distinguishes what you do here at Green Landscaping compared with what you've done before?

I mean when I first joined the Green Landscaping Group. I was blown away by the speed of execution that we have. And at first, I thought it was due to sort of the entrepreneurial spirit that we have in the company. But I've come to learn as time has moved on, that it is due to the fact that we know this industry quite well. So we know sort of the wrong turns that companies can take and how to spot good companies, right, which makes decision-making a lot easier, I think. And vice versa, the business model within landscaping is a lot easier than for the companies that I worked for previously, right, where you have a lot of technical due diligence that you need to do, IP due diligence, commercial due diligence and go-to-market due diligence. We don't have to do that stuff because we know how it works, which makes our processes a lot faster. I would say. And easier in that sense, too.

Absolutely, absolutely. Okay, very good. I think you mentioned that the live situation differs between a 50-year-old and a 30-year old in terms of the seller. Could you expand on that?

Right. So I mean, when I talk to entrepreneurs that are around 30 to 35 year old, I mean what they're looking for when they're talking to somebody like me are -- most of the time, they're looking for some type of investment or cash infusion to take on bigger projects, so financing essentially. They're looking for investments to grow their business even faster than what they've done previously. And sometimes, even they're looking for cash to fund other ventures that they want to do because I mean, they're young, they have plenty of time to do other things in life, apart from landscaping. And that's obviously not the case for somebody that's 50 to 55. And when you talk to them, of course, there's an element there about securing your pension. But it's also for them more about experiencing something different from what they've done for 30 years. So having, in a sense, colleagues that they can talk to when making big decisions because those big decisions, they have been alone in making for 20, 30 years. And just having somebody that you can pick up the phone and call when you're supposed to make a big decision, I think, is somewhat comforting to them when they become part of the group. And then a lot of times, when I talk to entrepreneurs in that age range, what I hear is that they have been influenced in their decision to join Green Landscaping Group by other colleagues in the industry that has already joined Green Landscaping Group because they respect that person and they respect that person's decision-making. So I think -- hopefully, I answered your question there.

Well, I think you did. Thank you, Sam. This concludes this part of the Capital Markets Day. We've gone through all the presentation. And now you will get the opportunity to, although briefly, meet the incoming CFO, Marcus Holmström Alstrom.

Good afternoon, everyone. My name is Marcus Holmström, and I'm very excited to be here today as the newly appointed CFO of Green Landscaping Group. I started my professional career as an auditor at EY, where I focused on global and publicly traded companies across various sectors. Following my tenure at EY, I joined AFRY, an engineering and consulting company, where I have had several leading finance positions over the past 10 years. Currently, as Head of Corporate Control & Investor Relations. And before that, I was a divisional CFO overseeing a division with SEK 7 billion in net sales and 4,000 employees. And before that, I was Head of Group Treasurer, where I managed the group cash flow, financing needs and handle the FX risk in the group. During that time, I also led a few projects -- financing projects, issuing -- establishing programs for issuing bonds, commercial papers. And I also led a directed share issue and rights issue. And with that said, I now look very much forward to be joining Green in the middle of December and contribute to the future growth journey.

Thank you very much, Marcus, and very welcome, although it's premature. Obviously, you haven't even started yet, but what attracted you to Green?

Yes, that's a really good question with many answers. And just to mention a few, I was, of course, very impressed with the financial track record of Green with the growth and improved margins that has been delivered over the past years. That caught my attention. And then when the opportunity arose, I was very impressed and shared a lot of the foundations in the group -- of the group strategy that everything is centered around the decentralized model and we fuel growth with M&A. And I think those are cornerstone -- really good cornerstones in creating share value for the company and the shareholders.

Thank you for that. What are your personal strengths that you will bring to the group?

I think my personal background with quite a broad finance experience will be a good contribution. As a person, I'm also very hands-on and eager to get things done. So that, for sure, will be something that I will bring to the company and continue to work around.

Okay. So coming up to the situation, have you been sort of given in an order or an assignment from the CEO or someone else on what is sort of A, B and C on your to-do list?

No, of course, it will be focusing on supporting the continued growth journey of Green, but then also focusing on capital structure and capital allocation going forward.

Okay. It doesn't seem like you're entering a house on fire like the CFO -- CEO presented before.

Absolutely not. It's a well-functioning house.

Okay, very good. Thank you for that. We will take a 10-minute break now. And when we come back, it is time for questions and answers. See you in a bit. [Break]

Welcome back to this concluding part of the Capital Markets Day for Green Landscaping Group. It's time for Q&A. And as you know, you could either ask questions verbally over the telephone conference or you can post them online in writing, and I will read them up to the presenters. We will start the session with the verbal questions. So operator, could I please have your assistance?

[Operator Instructions] And now we're going to take our first question, and it comes from the line of Dan Johansson from SEB.

Perfect. I have three questions. I hope you can hear me. I'll start with the first one. So you've been now in Germany for a while. Is that something that surprised you with the German market during this time that you didn't know beforehand? Did you have to make any local adaptation to fit the German market? Or was it just a plug-and-play the Green model that's been quite successful here in the Nordics? That was my first one.

Well, I think it's either Johan or Sam that could take that one?

I can volunteer on that one. So it really was about -- as I did mention, we did our homework in a very good way. We spent roughly 2 years understanding the market. And what we learned was actually that the model we have deployed and developed works actually even better in Germany than we, at the beginning, anticipated. So it's a more traditional market being with the public customers and having the family-owned business. And as we opened up our platform in Germany, it has been quite -- I would say, I won't say it's moved right, we've been working very hard. But I don't see that we have had any major surprises or expectations going on in Germany. So on the contrary, really, I think we did a good work in preparing ourselves entering into the German market. And we've been quite successfully so. And the only adaptation we are doing, that's basically the German language that when we are doing business reviews when we are meeting with the entrepreneurs, we do speak German with them. That's the adaptation we have made.

Maybe continuing a bit, you showed the slide a bit on profitability of different group companies. And a question on the low performance in the group. And I guess there's one particular underperformer that's quite annoying for you, but I guess it's less of a headache ahead then. But are there any learnings to be made to avoid these situations for the future? And also on the very profitable business as you also have, what are they doing differently that explains they are so profitable? Or is it something in the mix or in the way they're working?

Well, I think maybe Jakob could be the one answering that one or perhaps Daniel?

Yes. If I'll start off with the second part of the question, I mean, what makes the really good ones that good. I would say it goes back to our findings that we have done in what we call Wayfarer and how to execute really good business within this industry. And there are a couple of things that are really bull's eye in those companies. It's how they set up their delivering organization, who's in charge and who is accountable in each of the value steps inside those companies. And then it's definitely something around working on the income side in those companies as well. I mean, thinking, having more of what are our services worth for the customer kind of mindset instead of thinking cost plus -- on a daily basis. Getting back to the first one, I have to -- a short recap, Magnus.

Yes. Could you please recap, Dan?

Yes, sure. It was on the other side of the coin, the companies that are not performing. And there's, I guess, there's one particular one there. But is there any learnings for those situations that you perhaps could avoid in the future? Or is it just I guess, part of the normal distribution that you have some that's very successful.

Yes. I mean it's tons of learnings. I mean a lot of it goes back to Sam and his team in the future. I mean, what kind of acquisitions that we have done and how we are fine-tuning basically our acquisition criteria. So there's a lot of learnings for us in that area. But it also got something to do, what I talked about earlier, from my point of view, about our decentralized model and the enough-is-enough part. I mean we've been really -- how should we put it -- how had -- a mindset where we didn't want to interfere too early. And I think that is what we will do a little bit more brutal going into the future.

It's a trade-off between when you want to step in or how fast you should react on what you see. And as Jakob explained in that, with you are a decentralized company, if you are stepping into soon, then all of a sudden, everyone is going to expect you to step in too soon. And that's, to some extent, becoming a centralized company because then people would expect that you're going to step in. So it's a balance, and it's a fine-tuned balance, and it's a decision you have to make. And then one other remark here is basically that when we had the, I would say, the old management team and we were that many people, we didn't have the capacity to make speedy decisions. We weren't in a position to make those decisions as swift as I would like to have had. And now when we are remodeling the management team and also we are fine-tuning the way for our business model, that will enable us to act more swiftly moving into the future. Will we avoid all problems moving into the future? No, we won't. Even if Sam and his team are really good on finding the right companies, we will still make mistake, we still have companies who have been great companies and for various reasons, they're going to deteriorate. And then we have to find ways of improving those companies. And that's the process that we are improving, so we can do that in a faster way in the future than we've done in the past.

Fully understand. Sounds reassuring. Maybe a final question if there's time. You had a slide on the M&A section. I found quite interesting that you see quite strong growth initially in companies acquired, but with a little bit of dip in profitability. Is it because you invest and allow them to grow? Or is it more that as a public company, you had a little bit more of central cost to governance, perhaps a professional CFO or -- is it a mix of things, either the investment in growth or a little bit more group costs perhaps?

Well, one thing that we found, right, is that for the entrepreneurs like when they're selling their company, right, they're obviously preparing the company to be sold prior to the acquisition date, right? So they're delaying investments to get better numbers. And you have to account for that when doing M&A. And secondly, there's a bit of -- doing M&A, it's hard work. The entrepreneurs spend a lot of energy on making a deal happen. So what I think we see as well is also -- it takes a while for them to sort of recalibrate and get new energy to strive towards moving forward within Green Landscaping Group. And then on sort of the revenue side, like that increase in growth comes from not having the same sort of independent financial risk, right? You're part of the group, your risk is diversified in that sense. So you are able to take on projects that you otherwise probably wouldn't have done if you were alone as an entrepreneur, and you also get a lot of projects from other companies in the group due to personnel constraints, where one company cannot do a project, so they pass it on to another company in the group.

And also, we only have 3, 4 years of data to look back on.

Yes.

I understand. Thank you for that very interesting.

And the next question comes from the line of Julia Sundvall from ABG Sundal Collier.

I have two questions. So the first one on the margins. We see you have entered new sort of margin markets and you're looking at other as well. And we can see, if we look at Germany, that they have very high margins. And when you look out in Europe now, do we see any difference in potential in margins in potential markets?

If I could -- did you ask about if there is a difference in the pipeline of the margins that we have or -- I did not quite get that.

Yes. Yes, if you see -- like in potential markets, if there are different margins?

Yes. Okay. So if different geographies have different margins? Yes, I think this is possibly a question for Sam as well.

So the question is related to new potential markets then, I take it. And I would say not necessarily. I think the average margin, I mean, it can vary a bit between geographies, but not too much. It's rather a question of finding the companies that overperform the average market profitability.

Yes. I'll just add something to that. I mean, our market is so big and there are so many, many companies in each of our markets, and it's -- I mean, it's a normal distribution curve. There's top performers and the low performers. And I believe that the average profitability is basically the same in all our geographies.

Perfect. And my second question is that you have said that the market is moving sideways now. And do you see any light in the market moving forward? Is there more potential?

I can try to answer that one as well. It is a tough one. I mean, who knows. We communicated earlier in combination with our reports that maybe there's a slight change in the curve and will get better. But I wouldn't say that we got solid ground under our feet in that sense. So we'll see what happens. We haven't seen anything gone worse, to put it that way, in the last couple of months.

Now we're going to take our next question, and it comes from the line of Alexander Siljeström from Pareto Securities.

So one question around Germany and M&A. So just wondering about the competition with regards to M&A in Germany, if that's sort of higher or lower compared to the Nordics?

And I guess that's a question for me, myself and I. So I wouldn't say that it's vastly different from what we've experienced in other geographies, right? I think in Germany, we have 2 major competitors that we see, are active in the market, both are private equity backed. And there -- I mean they have a different model than the one that we have. And I think it's good to have that competition because it provides entrepreneurs different options when selling their companies. I mean our option works for certain entrepreneurs, but it doesn't work for all entrepreneurs. Then, sort of a private equity-backed model could work better for them. So yes.

Yes. And can you expand a bit about these 2 competitors? Are they solely focusing on landscaping and maintenance? And what are their sizes in terms of revenues?

Right. So yes, they're in the landscaping space. I don't think they focus as much as we do on the public sector. One of the companies focus a little bit more on private gardens. And the other one is in between sort of private garden and our sort of customer focus. And could you repeat the second question that you had there?

Just the size in terms of revenues for those specific players?

I don't have it on the top of my head. Do any of you have it.

No. The scope of the companies they are looking at are similar to what we are looking at. And as Sam said, they provide an option into the marketplace. And from our perspective, it's not necessarily a bad thing because it gives a certain amount of certainty that the company with entrepreneurs really want to go with us, they want to stay with the business. They want to continue to develop the business while if you want to move into retirement, for instance, then of course, there are other options available to the entrepreneurs. So we have competition, and we are not afraid of it. And we are still very disciplined when it comes to what type of multiples we are paying for our business, we are not overpaying. So it's a healthy competition, and it works good for us.

Fair enough. And then just if you could talk a bit about the M&A opportunities in Norway and Sweden. And especially in Norway, do you still see sort of potential for opening up a new geographical cluster within Norway? And I appreciate that you're going to focus on Germany, but just in terms of the Nordics as well.

I mean, in Norway, we obviously entered the Norwegian market space with the investment into A. Markussen in Narvik. And of course, we want to ensure that [ Florian ] has a lot of good qualities up there -- sorry, good colleagues up there as well. I mean, in the Nordics, in general, we have a good market position. We believe that we are top of mind in the landscaping industry when you want to sell your company essentially. And we have a very good machinery in our entrepreneurial network, where people are active in talking to companies and entrepreneurs outside of the group. So yes.

Perfect. And then just a follow-up on the post-M&A performance slide that you shared. So just thinking a little bit about this because it seems that you include -- you have 6 years of history. So it seems to be sort of starting from 2018, 2019 maybe. Just because -- I mean, sales growth seems to be at around 20% and margins seem to sort of contract by 1.5 percentage point if you were to use a 10% baseline. And that's not really my view of sort of your M&A performance during the first 3 years, especially considering sort of the journey in Norway and it's early days in Germany. So I think the question really boils down to how sort of representative this graph is for sort of the Norway and Germany journey that you are currently on.

Sure. So I can start, maybe Jakob, you can jump in. I mean that graph is basically based on 5, 6 investments that were made in Sweden during that time, which are -- the circumstances of Green Landscaping Group were vastly different than what they are now. We don't -- we didn't have at that time, the same opportunity to pick the top performers in the same way as we do now. So I wouldn't say that they are representative in terms of the companies that we look at now.

No, I can add on that. I mean, again, it's a definitely limited number of data points that we got here, that goes for a long time. But I mean trying to answer your question about what will happen in Norway and Germany, well, time will tell. But so far, I believe our companies are doing really good. I mean, everyone can see that's been a slight downturn in Norway for the last couple of -- for the last year or so. But one should remember that I mean, we got a super resilient model, and we stand firmly in a little bit of a shaky market. But of course, it still affect us. So we need more time to answer that question in a really good time. That's basically what it boils down to.

Yes. Thanks for clarifying that, and then it seems to be more of a sort of the legacy M&A. And then just two more questions from my side. You talked a bit about the low-performing companies and also graft them. So just -- and also the turnaround that you have done in the legacy companies. Just wondering if you have sort of any concrete examples of what you have done that has been working really well and that you maybe can implement to the current dogs, if you will?

I'll try to answer that one as well.

Yes, I can go first and you can add on.

Go ahead, Daniel.

Well, if we're talking about the legacy [ 18 ] group and if we think about concrete things that we have done, well, it is a lot about decentralization. Going from centralized to decentralization, it's actually a very big step. And it's all about the mind and feeling the responsibility for your business. And I think that's the main difference between centralization and decentralization, is the mindset of your business and building your company culture. So if you are very close to your customers, and you have the full P&L, you have your own company, we made companies, local companies out of Green Landscaping and Svensk Markservice, and we have new MDs in a lot of those subsidiaries, but not in every one; and all that combines to a better performance in the end. So I would say it's about corporate culture, mostly.

I can say, I mean, we got the skills. I mean, it's trying to be a little bit humble here, but I definitely think that we've got the skills. We made some turnaround journeys throughout the years. But again, looking at companies that are having a little bit more of a hard time now, it has to be like individually approach because there are often different kind of challenges in the different companies. So general learning and apply that into the maybe low-performing units just as is, I don't really believe in that. But what I do believe in is that we can work a little bit harder on it, not being that like, well, soft or forgiving about it. I mean -- and there are numerous things that we have done and numerous things that we can do with those companies. It could be all about like downsizing and -- regarding the strategies inside the companies, of course, taking a look on what kind of management we got and stuff like that. I believe we've got the skills, but it has to be approached with different like tools from company to company.

Yes. Fair enough. And just a follow-up on that. How often is this sort of underperformance driven by -- that the company is stuck in one or more sort of unprofitable contracts and it's basically about just about time and letting those contracts expire and then the profitability will pick up by itself, so to speak, how common is that?

I'll continue. I mean, I think -- well, touching upon Daniel's answer, it's a lot about company culture and if that's healthy or not. Of course, we've got some companies which we communicated before that are basically stuck in loan contracts with low margins. To give a straight answer, it's like around 50-50 split, I would say, maybe less on the kind of companies that are stuck in long, unhealthy projects, maybe like 30% for them and 70% for the others.

Yes. Thanks for quantifying that as well. And just a final from my end, and I will jump back in the line. Just around the margin target, I mean, you said in the presentation that you aim for margins around 8% to 10% for the subsidiaries. So just wondering, what the reason is behind not to, for instance, raising the margin target to, say, 9% to show that ambition to continue to strive for stronger profitability?

Yes, we have had the same target since we actually made the IPO back in 2018, so that is 6 years now. And that is an ongoing discussion what should be -- what type of financial targets should we have? Being between 8.5% and 9%, which we currently are, that is, of course, beating the financial target. And also, from my perspective, increasing the profitability in the current businesses we have construe a very huge potential going forward into the future. So there is an active discussion about the financial targets we have and what we should have. So that's where we are at this point of time.

Now we're going to take our next question. And it comes to the line of Mads Andersen from DNB Markets.

Maybe just first on M&A and the M&A capacity. You maintain 8 to 10 transactions per year, but you also say that that's considering capacity constraints. I think Johan was talking at an investor event yesterday of one of your biggest shareholders, where he essentially said that the plan was to double the capacity over the next 3 to 4 years. Please, can you just confirm whether I understood that correctly? And then secondly, on that note, if -- in the past, you've said that 8% to 10%, we should think about that as the average company being -- or adding SEK 100 million in revenue, so SEK 800 million to SEK 1 billion in additional sales. If you're doubling that, should we think about those companies at a similar size, so essentially SEK 1.6 billion to SEK 2 billion in added revenue? Or should we think about that as those companies coming in on top of 8 to 10 being lower on average? That's my first one, please.

And the answer is yes. I can elaborate on it. There are different constraints. So you have the financial side of the company, of course, how much money do we have, and that's a capital allocation and also what type of capital structure do we have. So that is basically the firepower in order to execute. And when we talk about a number of acquisitions and volumes and so forth, we typically refer to a company with SEK 100 million at 10% margin. That's in -- top of our mind. That's what it means. If we talk about 8 companies, then that is SEK 800 million in acquired revenue. And then I'm coming back to the constraints because you have certain constraints when you do the acquisition. The financial side is one of it. But it's also about the people and it's about the people like Sam and his team, who is out in doing the acquisition, doing the footwork. And it takes time to understand and learn what are we looking for, what is a quality company what are the entrepreneurs culture, business ethics? Do they mix into the company? How do they fit in? What's their future plans? So we can really making sure that they will fit into -- in a good way into what we are doing. And we have expanded the number of people inside our organization in terms of the capacity to find and negotiate and at the early stages, taking care of the companies. Then the structure of taking or -- on the receiving end of the acquired companies, that's the capacity that we need to increase, and we are increasing that one, and that's the region managers and that type of function that needs to come with it. So we are building up our capacity in order to successfully find and take care of good companies. And that's a journey that will take another, I would say, 2 years before we are in a good position. And after that one, we should be able to see basically a doubling in pace in terms of acquisition. So yes, I am looking for doing 20 acquisitions in 2 to 3 years, given the different constraints inside the company and how we have increased the capacity.

That's very clear. But maybe just on that, I mean, obviously, you want to build up the internal capabilities. But if we look at the markets, I mean, maybe you can just comment on how much -- if you look at the transactions in Germany right now, what's your market share of those transactions? But also given that it's -- I mean, maybe take the DACH region, is the biggest opportunity. Is it realistic to do 20 acquisitions in your current markets in 2 years from now? Or will you have to branch out elsewhere in Europe to get to those 20?

I would say that we have a plan where we say that, okay, the majority, and we're talking about 70% to 80% of the acquisition from a capital allocation perspective, will be done in the German-speaking region of Europe at this point of time. And we have to keep in mind that Germany is about 8 to 10x as big as Sweden. So if we do one acquisition in Sweden, that equates to 10 acquisitions in Germany. So of course, there is a capacity to do that one. And also as we had the discussion with Magnus about the geographical expansion that we will open up new markets as well in the coming 2, 3 years. So we are looking upon Eastern Europe and neighboring countries to Germany as well. So it's a very big market out there in Germany. And to the best of my knowledge today, that will easily support our ambition of growing by 20 companies per year going forward, not next year, but in 2, 3 years' time frame.

Understood. Very clear. Maybe just the last one. I know you guys are allergic to centralization. But obviously, with the kind of scale that you are building, not least in countries like Germany, there's also a potential significant scale benefits, especially on something like procurement. I know you run a group-wide procurement scheme in Sweden. You haven't really talked much about potential synergies on that side of things today. How should we think about something like that going forward? I know you're never going to -- probably never going to ask the companies by default to purchase via one organization, but there could be some potential benefits it would seem. So how are you thinking about that?

I mean in -- we got a saying, we talk a lot about evolution, not revolution. So one step at a time. But as you mentioned, we got like purchasing infrastructure in Sweden. That's actually the only market where we had that structure set up like from a central perspective. One should know or say that this is not like we are having any red framework agreements where we are like forcing our entrepreneurs.

It's not mandatory.

Not at all. But of course, I mean, I agree with you, there might be possibilities in these kind of areas where we can help our entrepreneurs to -- with purchasing, for example. But we have to move really gentle forward in these questions because of the decentralization, centralization like interface and that problem that lies within being a centralized company.

Thank you. Now I would like to hand over to Magnus for any written questions.

Thank you very much. Yes, we have a bunch of them. We can take this first one from [ Christian Builder ]. Does Germany being the sick man of Europe, again, affect your expansion strategy in the DACH in any way? I think this goes to the CEO.

Yes. Thank you. Actually, I did receive that question yesterday as well. And it's -- I think Germany, I'm not a politician here, and I'm slightly out of my league. But from my perspective, Germany is in difficult or difficult times to come. So I think the economic situation will worsen as you look into the future of Germany. And if you are in the business of acquiring companies, doing investments in Germany, it's actually an upside. So it's a business case in order to do it. Also, I spent a significant time today talking about the stability of the market, and the market is stable in the segments we have. So I don't foresee any major drawbacks or disturbance on our business model. I believe Germany will follow a similar path, as we have seen both in Sweden and Norway and Finland. And that is basically that the big projects will disappear. You will see an increasing number of companies who participate in the bidding process. And to some extent, you're going to see that the increased competition going to lead to -- at least what we saw in Sweden and Norway, it has affected our profit margins by roughly 0.5% to 1% profit margin. That's what I see going on in Sweden and Norway. And potentially, that is what's going to happen in Germany. And though -- if that materializes in that way, I don't see that have any major implication on our strategy towards growing in Germany in the coming 2, 3 years, on the contrary, I would say.

Okay. Very good. Another question here also for the CEO. Could you give a specific example of thinking in 5 to 10 years versus optimizing next quarter results? And I think this goes back to the presentation held and with a very long time frame that we had. Anything concrete there, any examples of that?

Yes. We are -- our ambition is to build very strong and successful companies. And our horizon, as we are talking about, is 5, 10, 15 years into the future. And one topic that typically comes up when we do an investment, that is succession planning, how are they organized? And what's the infrastructure inside the company? And of course, if you have an entrepreneur who has been doing this for 20-plus years, he's running a very lean organization, and he's running at full capacity; then of course, that is one way of maximizing the profit here and now. When they are being -- becoming part of Green Landscape and then, of course, we clearly see that, that is a problem in the future that we need to address today. And that means that we actually need to have a project leader or a second man in place in that company, and that is a decision we make today instead of waiting until it's too late. So I'm not -- we are not, what do you say, maximizing the short-term profit, that would be keep the guy running at full speed for another 2, 3, 4 years, and then you have a potential big problem. So we choose to invest today in the infrastructure in the companies that are coming into the group. And typically, the entrepreneurs are not on their own interested in making those decisions because they want to maximize the profit, while we want to maximize the company in 5 to 10 to 15 years into the future. So we're actually more willing to prepare to invest in the infrastructure in the businesses that becomes part of Green Landscaping than typically the entrepreneurs themselves.

Thank you very much. Next question, probably also for the CEO, looking at the local market presence, any thoughts about an ideal local market share. Is there any density arguments to the model, i.e., higher market share driving performance? Or does the 2 high market share dilute the performance as you cannot be picky with contracts?

Again, it's a very big market. Even in, I would say, a fairly small town, if you talk about 500 people living in the town, you have several companies in the vicinity and in the town by itself. So getting that high market share that you actually could have like a monopoly or increasing prices or margins based on that market position. We have not experienced that one, and that will probably attract competition anyway in the short term. So no, that's not really our goal. Our goal is to build a cluster. So you have 2, 3 players in that town, and then they're going to learn from each other. They talk about the different bids that comes up and who -- what are the remaining competitors doing and so forth. So the knowledge sharing and the experience sharing between the different companies we have is much more valuable than having like a monopoly situation because you can't establish a monopoly in this type of business.

Thank you very much. This next one is interesting. And I will actually address it to all four of you. What has been most frustrating, challenging this past year? Think about that, and I'll let you answer all four of you, while I take another question in the meanwhile that rests solely in the [ lack ] of the CEO in [ lack ] of CFO. Could you talk about share buybacks as a capital allocation lever?

Of course. In terms of capital allocation, we look upon where do we get the best value for the money we invest. And if we should do -- we do actually make a small proportion of share buyback in order to -- but again, it's about on the return on investment. And right now, having plus 20% return on investment on investing in M&A activities, we consider that being at a higher value compared to buying our own shares at this point of time.

Okay. Very good. Very good. So let's go back to the most frustrating or challenging that has happened during the past year. Let's start with you, Sam. What would be your answer to that?

I mean when you're working with M&A, right, you speak to a lot of really likable entrepreneurs that oftentimes build up their landscaping company from the ground up. They started with a wheelbarrow, and now they've run a successful company or a good company. So you always get emotionally invested in a particular company or a process that you're undergoing. So I always get frustrated when I get to know from these gentlemen that we cannot move forward with an investment, which happens more often than they say yes. So my work life is a lot of frustration.

And with these gentlemen, I suppose you mean the other ones that you shared the stage with, right?

Yes.

Okay. So moving over to you, Daniel, your biggest frustration or challenge this year?

Well, I think it's actually about learning or maybe sometimes the lack of learning and taking care of the experiences that we could learn when we were doing mistakes. We have a tendency in some companies that we do the same mistakes over and over again. And now we are really addressing that with the Wayfarer project. So we will take care of that in time, but that could be kind of frustrating when we see the same thing going over and over instead of find a root cause to the problem and solve it.

Okay, very good. Not a very highly surprising answer from someone working with operational excellence, I might add. Jakob?

Yes. I mean, I would say it's not only about last year. It's a little bit about constant feeling ever since I started in Green. But at the same time, that's what gives motivation to keep doing it. And what's really making it fun is that I mean, the potential is there. And then we are working with like enhancing our vehicle, our Wayfarer -- fine-tuning the M&A model and see what are like financial side and leverage things as all these things combined go together in how we can like maximize -- not being like on the second gear to shift together up to the third year because the potential is out there. It's a beautiful market with a lot of possibilities. Then I used to say this is like playing clay tennis. You have to kick over the ball over the net over and over and over again. It's not like a serve an attack kind of game we're playing. So being really like how do you say it -- having a lot of endurance, is that the right word in English? Condition, yes. I think that's both what's really frustrating, but at the same time, so inspiring.

And Johan?

Yes. I'm not supposed to talk about the share price here. So we're going to save that for another discussion because that is, of course, a bit of frustration to me. But nonetheless, we have today about 60 companies inside our business. And we have businesses with very high profit margins, and we have businesses with not that high profit margin. We started out more than 2 years ago, developing a program, and that's when we refer to the playbook and the Wayfarer and all that. It has taken us 2 years to develop and start to implement that process. So when I started out talking about it 2 years ago, I thought this was basically a 6-month journey, the quick fix, we have the knowledge, let's implement it and move on. So that's basically the frustration. I can see that it has taken us quite some time, and that goes back to the discussion Jakob had between being centralized and decentralized, how do you implement? How do you work with these type of tools? If you take the Danaher business system, for instance, it's a very well-established tool, everybody knows how it's being done. There are models on how to implement it. But then all of a sudden, you'll start to become like a centralized company. So you have to adapt. And that adaptation, the discussions between ourselves on how to approach the entrepreneurs with the different tools, the knowledge we have -- and once upon a time, we actually thought that the knowledge would spread on a natural basis by the entrepreneurs communicating with each other. It was kind of, of course, they're going to pick up on the good things their colleagues are doing. But that turned out to be a too slow process. It took too long time, and I don't think the entrepreneurs really understood what were the other entrepreneurs doing. So we had to develop a playbook where we basically could document what's going on, what makes them successful. And then as we have done that one, then we start to talk about how do we deploy this one. And we started the deployment in Germany with the companies there. And then we are doing a back deployment in Sweden. And then eventually, we're going to do Norway and Finland as well. So that's the journey we are on, and it takes some time in order to do it in a good way. But I think that's a frustration that I thought we could do it in 6 months, and it took us 2 years.

Thank you very much. Mindful of the time, any more questions that you might have now or later on, just drop me an e-mail or give me a call, and we'll get back to them as well. I would like to invite the CEO at this point for some concluding remarks before we close the Capital Markets Day for this time.

Okay. So thank you very much, Magnus. It's been a pleasure. I know you have done a lot of work getting this all together. And the closing remarks on my side is really about -- we are active on a very large, very stable market, and that enables us to take positions, strategic decisions, finding great companies and really building the company into the future. So the market is of a very big importance to us. Also, we have elaborated about our business model and our strategy and how we actually can sustain the profit margin and even improving the profit margin moving into the future. And that is all about the business model that we have developed. So being in the market, we are having the business model that we know works very well for us and then of course, being able to add very successful companies through M&A activities or investing in the people in those entities, that is really a powerful strategy, I would say that we are in. And just look upon where we are today, where we are on track of becoming the industrial leader in Europe, I think it's a fantastic journey. So I'm quite happy having this first Capital Market Day here. So thank you very much, everybody.

Thank you very much. And what a milestone. This concludes the Capital Markets Day. Should you wish, and we wish you to, take a minute to give us feedback on what you've just heard and seen. A survey is available in the webcast, but for now, from all of us to all of you, enjoy the rest of your day and sweet green dreams.