NNIT A/S (NNIT) Earnings Call Transcript & Summary

Hello, and welcome to the NNIT Financial Report for the full year of 2021. [Operator Instructions] Today, I am pleased to present Par Fors, CEO; and Pernille Fabricius, CFO. Please, begin your meeting.

Thank you very much. Good morning, and welcome to this call on NNIT's financial performance for Q4 and the full year of 2021. Turn to Slide 2, please. My name is Pernille Fabricius, CFO of NNIT. With me today is our CEO, Par Fors. I'll briefly walk you through the practicalities for today's meeting before giving the word to Par. Today's Q4 release as well as the slides being used for this presentation will be available on our website, nnit.com. The conference call is scheduled to last approximately 45 minutes, depending on the level of questions. The presentation is expected to last around 30 minutes. Today's agenda can be found on Slide #3. Please note that this call is being live cast and that a replay will be made available on NNIT's website after the call. Turning to Slide #4. Please be advised that this call will contain forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual results to deviate considerably from the outlook set forth. Furthermore, some of these expectations are based on assumptions regarding future events, which may prove incorrect. With these words of introduction, I'll give the word to Par Fors and turn to Slide #5.

Thank you very much, Pernille. And let me also extend a warm welcome to all participants on today's call. And let's please turn to Slide #6. NNIT is on a strategic journey. I would like to start by setting the scene and reiterating that NNIT is in a strategic journey working towards -- hard towards establishing our growth and profitability across all business units and customer segments. And while we believe our course is right, we have a long way to go along with uneven road where some bumps are to be expected. I used to say that we are running a marathon, not a sprint, even if we cannot always anticipate them around on their timing, we are remodeling the car while driving it. That's one expression we use internally. And in Q4, most notably, our special items are higher than usual due to an investment in a specific public customer segment, which did not pan out well and which we now have abandoned. Unfortunately, this significantly and negatively impacted our results, in an otherwise satisfactory last quarter. Pernille will go into specific about this later in her presentation. Special items aside, Q4 is once again characterized by impressive growth within our international life science activities, we're up 29%. Furthermore, we maintain our guidance for the year, and our full year revenue increased by 1.7%. So we are optimistic about the future and believe that the adjustment that we have implemented and announced in 2021 will address and mitigate the challenges we are facing. So let's have a look at the quarter's business highlights. So please turn to the next slide. By the end of '21, we announced and initiated a major organizational change to create 3 distinct business units: Cloud and Digital Solutions, which is our Project & Consulting business, Life Sciences Solutions and Hybrid Cloud solutions. The strategic rationale lies both in a diverse development in our customer base, requiring us a more unique approach in each market segment as well as a need to speed up business development further in close alignment with our customer needs. But let me deep dive into more on my next slide. This quarter, we have secured a couple of major new agreements, including an outsourcing contract with a Nordic regional security coordinator to deliver critical IT operation services for 5 years and also an outsourcing contract with E-nettet for infrastructure services and support concerning Danish public companies, E-nettet's portfolio of application for the coming 5 years. This, of course, is very positive. As I have already touched upon, special items for this quarter were significant at DKK 61 million. Pernille will explain the component of this in further detail a bit later. Finally, we'd like to highlight that NNIT was named the most attractive workplace in Denmark for IT consultant in 2021 by the largest Danish publisher of media about technology and science called Teknologiens Mediehus. We couldn't be happier and prouder about this. Turning to the next slide. As promised, I would like to go into a bit more detail about our new organization and what we are expecting going forward. This is what the new NNIT organization look like. We have 3 customer-facing business units. We have introduced this new organization to enable future profitable growth of NNIT. We will strengthen the customer orientation, provide better solution alignment and more unit empowerment and transparency. Let me provide you with more details on this if you please turn to the next slide. So first, let's first have a look from where we came from. We came from 2 customer-facing business units, supporting by 2 delivery units, and we have now 3 business units, all responsible for their own sales, business development and delivery. We believe, and I already see how this would release energy and empower the business units as well as increase transparency and accountability across the board. So please turn to Slide 10. Before I ask Pernille to take over, I would like to encourage you all to read through our annual report also released today to get a more comprehensive outline of NNIT's 2021. Here, you will also find information about our new ESG rating, which has made an impressive drop, and that's a good thing, from 7.1 to 13.3 a low risk rating. And now, Pernille, over to you, and please take us through the financial statement.

Thank you very much, Par. Let's have a look at our financial performance of Q4 and the full year of '21. Please turn to Slide 12. NNIT realized a Q4 revenue of DKK 738 million, corresponding to a 1.5% decrease compared to Q4 '20. The organic growth was a negative 6.7%. The winning solutions share of revenue increased to 55% or DKK 406 million. Operating profit before special items landed at DKK 37 million, constituting a margin of 5% in Q4. The investment level was kept at DKK 20 million in Q4, corresponding to 2.7% of total revenue. The full year of '21, consequently, NNIT realized a revenue of DKK 2,877 million, corresponding to a 1.7% increase compared to 2020. The organic growth was a negative 3%. Revenue from winning solutions was DKK 1,518 million, corresponding to a 53% share of full year '21 total revenue. Operating profit before special items for the full year of '21 was DKK 142 million, constituting a margin of 4.9%. Lastly, investments were kept at DKK 96 million, excluding investments in subsidiaries corresponding to 3.3% of total '21 revenue. Now, please turn to Slide 13, where I will elaborate on NNIT Group performance for Q4 '21. The total Q4 '21 revenue decrease of 1.5% compared to Q4 '20 was particularly, and as seen in previous quarters, positively impacted by Life Sciences, excluding Novo Nordisk Group, which grew 29% compared to Q4 '20. Q4 '21 revenues from the Novo Nordisk Group, on the other hand, declined 27% compared to Q4 '20, also corresponding to the development seen in previous quarters, partly driven by the new terms in the SLA agreement announced earlier in the year. Revenues from private and public declined 4.2% compared to Q4 '20, mainly driven by challenging market conditions. The operating profit before special items was DKK 37 million, corresponding to an operating profit margin before special items of 5% compared to 7.3% margin in Q4 '20. The decline was driven by a reduction in revenues within the before mentioned segments of the business, with the inability to match cost capacity based on short notice. Special items of DKK 61 million mainly relate to a DKK 29 million impairment related to the exit of a specific customer segment and DKK 27 million related to restructuring costs. As a result, NNIT realized an operating profit of a negative DKK 24 million in Q4 '21. Due to tax income at DKK 23 million, and our financial income at DKK 3 million, net profit for the quarter ended at DKK 2 million. As can be derived from the above, the results was therefore highly impacted by special items in Q4 '21. Now, let's have a look at the financials for the now former customer segment. Please notice that these will be replaced at the Q1 '22 release with the new strategy. Please turn to Slide 14. In Q4 '21, total Life Sciences revenue was on par with Q4 '20, seeing a very varied growth pattern within the individual segments, as mentioned before. In Q4, Life Sciences international revenue increased to DKK 200 million corresponding to a 47% growth quarter-on-quarter and a full year 56% growth. The increase came from strong organic growth in Europe and U.S. helped by inorganic growth from Excellis and SL Controls. Main growth drivers were found within the winning solution areas, quality management and production IT. Also, technologies, including Veeva Powerhouse and TraceLink supported this growth. In Q4 '21, revenue from Life Sciences Denmark ended at DKK 62 million, corresponding to a slight decrease compared to Q4 '20. Full year revenue of '21 was on par with '20 revenues. Turning to the business with the Novo Nordisk Group. Q4 '21 revenues ended at DKK 153 million, a reduction of business with Novo Nordisk Group of 27% compared to Q4 '20, stemming from a combination of decreasing SLA revenue and less consultancy work. Full year '21 revenues from the Novo Nordisk Group ended at DKK 605 million, which is a 17% decrease. End of '21, Novo Nordisk Group constitutes 37% of total Life Sciences revenue compared to 51% at the end of 2020. Turning to the share of total NNIT Group revenue, Novo Nordisk Group constituted 21% for the full year '21 against 26% in the full year of '20. Summing up the total Life Sciences segment, operating profit before special items in Q4 '21 ended at DKK 33 million, resulting in a total operating profit margin before special items at 8% compared to a 10.7% margin in Q4 2020. The decline follows reduction in the business with the Novo Nordisk Group as a total. In the full year of '21, the operating profit margin before special items ended at DKK 119 million, constituting a margin of 7.6%. Now, please turn to Slide 15, where I will elaborate on Private & Public. The total Q4 '21 Private & Public revenue decreased to DKK 323 million, down 4.2% from Q4 '20. Full year '21, revenues from Private & Public decreased to DKK 1,302 million, down 5.7% from 2020. The revenue decrease is mainly the reduced business within the public sector, although the share of winning solutions revenue increased throughout the year. The Enterprise segment, including SCALES, saw a revenue increase to DKK 190 million, up 10.5% from Q4 '20. For the full year of '21, revenues from Enterprise segment increased to DKK 725 million, up 1.8% from last year. Within the Public segment, Q4 '21 revenue decreased to DKK 68 million, down 35% from Q4 '20. Full year '21 revenue decreased to DKK 309 million, down 24% from '20. The decrease was mainly driven by reduced project activity. Within the Finance segment, Q4 '21 revenue increased to DKK 65 million, up 6.6% from Q4 '20. Full year of '21 revenue increased to DKK 268 million, up 2.3% since '20. The increase is mainly stemming from increased project business. Summing up the segment of Private & Public, operating profit before special items ended at DKK 4 million for the quarter, constituting an operating profit margin before special items of 1.2% compared with 3.3% in Q4 '20. For the full year of '21, operating profit margin before special items in the Private & Public segment ended at DKK 23 million, constituting a margin of 1.8%, down from 3.1% in '20. This sums up the trading performance, please turn to Slide 16. And now, let's turn to the balance sheet. For the full year of '21, total assets increased to DKK 2,797 million, up DKK 135 million from DKK 2,662 million in 2020. The increase related to intangible assets following the acquisition of SL Controls in Q3 '21 and increased trade receivables partly countered by decreases in intangible assets and lease assets. The latter explained by an impairment of lease assets in Q2 '21. Net cash and cash equivalents amounted to a negative DKK 266 million, down DKK 105 million since the end of '20. The decrease was mainly driven by payments related to acquisitions, DKK 113 million, repayment of holiday allowances, DKK 130 million, and payments of ordinary dividends of DKK 20 million, DKK 25 million, and these cash outflows were, to a certain extent, countered by positive cash flows from the operating activity. Equity at the end of '21 amounted to DKK 1,142 million up DKK 8 million from the end '20. Now, let's move to the cash flows. Please turn to Slide 18. Free cash flows of Q4 '21 was positive at DKK 115 million, which was DKK 155 million above 2020. The increased free cash flows quarter-on-quarter is mainly due to the acquisition of Excellis in Q4 2020. Free cash flows for the full year of '21 was DKK 34 million, down from DKK 143 million in '20. The negative change in free cash flows is mainly driven by a reduction in net profit and repayments to Feriefonden, partly countered by increases in deferred payment of taxes as part of the Danish COVID-19 aid packages, along with the lower investment activities. Now, let's move to the backlog development and full year outlook. Turning to Slide 19. Please move to Slide 20. At the beginning of Q1 2020, NNIT's order entry backlog for '22 amounted to DKK 2,017 million, up 0.9% from last year. The backlog from Life Sciences, excluding Novo Nordisk customers increased by 14.2%, driven by Life Sciences International positively impacted by the acquisition of Excellis and SL controls, while the Novo Nordisk Group declined 6.2%. The backlog from P&P decreased by 2.2%. Now, let's move to our outlook for '22. Turning to Slide 21. As stated in the annual report, NNIT will, in '22, operate within 3 new business units supported by operational performance and profitable growth -- was supporting this. In relation to the new organizational structure, the overall full year revenue guidance for '22 will increase with revenue growth of 2% to 5%. The '22 guidance concerning operating profit margin before special items remain around 5%. Also, we are introducing guidance on special items for the full year of '22 due to the transformation towards a new organization setup, supported by an optimized offshore setup. Special items could potentially resulting from this, end up at the same level as '21 in nominal terms. Now, for some closing remarks, please turn to Slide 23. Life Sciences International is continuously experiencing strong growth, reflecting the positive development and pace within this area of the business. Across the group, we are experiencing continued growth in the share, stemming from the NNIT winning solutions. However, in an averted comments, as Par mentioned, we're still fixing the car whilst driving it. And as a result and on the basis of the financial performance, it's proposed not to pay out dividends for '21. For '22, we slightly increased the financial guidance on revenue growth, whilst maintaining the guidance on operating profit margins. In addition, the guidance on special items cost in relation to restructuring and refining the company is included. Going forward, we will focus on the new organizational structure to ensure the establishment of a platform for strong and profitable growth. Finally, as stated in December, we will start reporting on our new organizational setup from Q1 '22. Operator, we are now ready to turn to the slide -- to the next slide and take the first question. Please turn to Slide 24.

[Operator Instructions] And the first question is from Poul Jessen, Danske Bank.

I have a number of questions, Par, for you initially. First, you have signed 2 new contracts with [ NIC ] and Arla. Can you comment on the margins on these contracts versus what you, on average, have on the business today? Or is it just to secure scale to share the cost?

I cannot comment on the specific margins of a specific deal, I think you -- can hope to understand that. But I think in general, I mean, what we are doing on our transformation is making sure that these we are winning are providing value to the clients, of course, but at the same time, provide value to NNIT. So part of the transformation that we're in is actually to making sure that we take on the deals that will enable profitable growth.

So it should not be a dilutive level as we see for the average business today?

No, it isn't, Poul. It's -- there is really a focus on getting deals in at an acceptable margin level, and it is a higher margin than they had before.

Okay. And then if we look at Life Sciences, you had -- the margins were down 3.5% year-over-year. I was just wondering how is the gross margin performing if you exclude Novo Nordisk from that line? Is it Novo Nordisk driving the decline? Or is it mix in general?

No, it is solely Novo Nordisk, and this relates to remember, in the middle of the year, we had the reduction of the Italy agreement, which was a price reduction, and it's due to that.

And I think it's worth mentioning that -- I mean, that new deal, I mean, it was -- it's kind of the market dynamics, right? I mean, in the infrastructure business, you have with dynamics that when you are renewing a contract, you are -- the price is going down in the market. So that's a reflection of that. So we will continue to do lots of additions but just at a lower margin, which is according to the market.

Okay. And then, a little about future, but also the comment you gave on infrastructure operations, where you say it's difficult to reduce production cost. So then it's a mix? One question is the outsourcing you're doing is that reducing China moving to Europe? Or what exactly is behind that? Secondly, are you going stop there, about the whole showing?

So what we are doing, Poul, is we are optimizing the off-shoring setup. And of course, it has also to do with what you just mentioned, which is related to the trends too and those elements. So we are looking into all of that to ensure that we operate in according to that, but also optimize the margins at the same time.

And I think, maybe, add some topping on that, if we see what's happened in the marketplace, I mean there are 2 different happenings in parallel. I mean, firstly -- I mean, there are some clients that have different reasons, want our infrastructure operation and the IT services provided within Europe. But there is also what -- which you shouldn't forget, I mean, many larger companies, for which it is important and also, very natural to have global delivery centers. So I mean, it's -- those things are happening in parallel. So for us, it's really important to being able to serve our clients, those close to the clients and as you -- in the -- where they're having their operations. But also, near-shore locations, but also offshore locations. So that is our strategy going forward.

And what kind of wage inflation are you seeing now? And I guess, it's moving up, but can you mitigate that to keep the cost line or profitability more or less slightly so -- or how should we look at that?

Yes. In terms of wage inflation, you may be also talking about the outlook, but there has been quite some wage inflation in certain parts of the offshore locations, in particular if you know. And it has been, over time, also reducing, the differences in wages between Denmark and say, China and Europe. And by doing this, we can sort of ensure by moving people around, we can also ensure that we get a better platform and are not so impacted by the wage increases in certain areas.

Yes. And also, I mean, what is happening in the majority of market is that there is a war of talent out there, but it also affects the prices. Because, I mean, there is, of course, a shortage of resources in many areas, but that also translates to an easier position to increase the prices to mitigate the wage increase. So that's another thing that's happening in the marketplace. The clients are aware of the shortage of resources.

Prices on the existing contracts? Or is it only new business?

Well, if you have an existing infrastructure outsourcing contract, the crisis for the SLAs are set in the beginning. So those you can change. And then sometimes you have the additional services, consulting services, where the prices are indexed so that's kind of set. But then you have the majority of our T&M and project consulting business, where the -- where it's kind of spot prices. The prices are set there, if not every day, in whenever we provide new resources. And especially in those cases, that's where you have a bigger ability to adjust the prices.

The next question is from Yiwei Zhou, SEB.

I have also, a couple of questions here. One is on the guidance for 2022. So understanding you have spent, I mean, over DKK 200 million in the restructuring, and you have done a lot of work. But why we haven't seen the benefit reflect in the guidance? Is it fair to understand the benefits you expected from those restructuring initiatives below your expectation? Or is there any other natures? Could you elaborate a bit here? And I have 2 other questions later.

Yes. Let me maybe help out here. So what I've also said to some of the analysts when we've talked, this is a bit of a longer restructuring than maybe what you had thought at first. So the reason why we are also guiding with restructuring in the year to come, is that firstly, we have spent, in this year, you can also see that in the specification, you can see we have spent you can say funds on reducing the space here. We spent money on restructurings or payouts to the former CEO and to reduction in the employees. We have also had some spending in terms of pulling out of a customer segment within the public sector. And we have had some M&A. And that has quite sort of impacted the level this year. It hasn't only been restructuring. There are also some extraordinary impact this year. The reason then for us to, next year, guide with special items, nominally up to the level that it has been this year, is that now, we are establishing -- or we have established but are refining the 3 pillars. And with that comes quite some additional costs in relation to, you could say, both building solutions, but it also comes with restructuring the underlying platforms that they have to spend on here on the off-shoring. So I wouldn't say at all that what has been spent in '21 is in vain. It is quite specific, but it takes more for the coming year to enable the platform for growth in popular trends.

Okay. Okay. Very helpful. And then, my next question is on the international Life Science. Could you maybe comment a bit on the competitive situation at the moment?

No. I mean, I think we are -- we have a great market position. I mean, we do have a full range of services addressing the need of the Life Sciences sector. Going from the early phases in R&D into the clinical testing, into production IT and also some kind of downstream. But we are not the biggest company out there. There are huge global companies that we're competing against. So we have a niche position, but within specific areas, we really have a significant, actually, market share because this is a very specialized market where we are competing, partly, against really big global players which have many, many employees on the payroll, but actually, not that many people that are specialized in the areas where we are. So if you break it down, we are a significant player in the niches that we have chosen to compete with. So our competitive landscape are part some of the big global players, but there are also some similar players to us out there, which are specialized in Life Science. So 2 different landscapes that we are facing, but we are confident that we have a strong competitive position.

Okay. Great. And how the wage inflation in -- also the labor shortage for this business? I guess, now for the international Life Science, you are also looking at the talent pool in the Swiss, in Germany, in those countries. Could you maybe also give us an indication?

Yes. I mean, on the positive note, I mean, firstly, I acknowledge there is a war of talent also, within Life Science because it is really, really attracting people who have a mix of knowledge about the industry added with technology. So there's definitely a race for talent out there. But on the positive note, I mean, in Life Science, we don't work with as many long SLA contract where we lock in our prices for a long period of time. We sell more shorter projects in terms of consultancy advisory but also, projects running for some months, but not many years. So that means that we are not as exposed to the situation where we lock in our prices while our cost goes up because on the spot market when we provide a short-term kind of capabilities, there, we are able to adjust our prices in accordance with the wage inflation.

Okay. Great. And my last question here is looking back to the Danish market. Could you give us an indication on the current employee attrition?

I will not go into any specific number, but there is -- I would say that our attrition is in line with the market here in Denmark, which is actually a bit lower than some other markets. So there is, of course, a race for talent here in Denmark as well. But I think we are feeling confident with that we are being able to attract a large number of those senior people and junior people and people in between, so to speak. So that is as important as addressing the attrition. You always continuously need to work with your attractiveness as a company to attract new people. And here, I'm pleased with the development in '21, but this is a continued journey where you, all the time, need to improve with a lot of activities to make sure that you strengthen that position.

Okay. And just one follow-up. So if you compare to the pre-COVID level, could you confirm the employee attrition has been stable or is a bit higher? Because we have heard from other companies, IT companies saying they have shown some increased numbers.

So I think, what we can say here in terms of that, it's not a significant increase we've seen. It's actually -- it's yes. Very limited.

But as such, I mean, I think the whole industry is suffering from a higher attrition that we would like to be. So I mean, it's higher today than it was some years back. And I think it's something that's really on the top of our strategic plans to address that. So that's where we are.

The next question is from Mads Quistgaard, Carnegie.

So going back to special items here. What is sort of the timing of the special items? Should we expect it to be front-end loaded or equally split throughout the year? And one more question here, do you expect to exit more customer segments this year?

So no, this was -- so Mads, this was a special case, this one. This is an effort that was put into to sort of in 10 to 1 which wasn't very successful. So we're not going to exit more. That was a stand-alone. And then, in terms of the special items over the year. No, they're not going to be front-loaded. They're going to be, across the year, in connection with an internal program that we have on the optimization front. And we are, of course, going to work very hard on minimizing the costs. So the reason for kind of putting it as a comparison to '21 and then staying up to is just because it's difficult to predict where we're going to land on that. But all across the year, what you asked.

Fair enough. Then maybe, on the project business within the Novo Nordisk, maybe you can comment a bit about performance. Has it been stable from quarter 3 into quarter 4? What do you see in the beginning for quarter 1?

So no. I mean, what -- yes, we -- it has been ever so slightly increasing from Q3 to Q4, the project business. So -- and actually, that's kind of moving in the right direction, but what has been the very significant impact here is that we now have the price on the SLA contract, as I said earlier. So I don't think when you look into next year that you should expect sort of a downward trend on your -- on the project business is in your model. That's not what we see at all.

Okay. Okay. And then, you no longer guide on CapEx to sales. So what should we expect in terms of the investment level for next year, excluding acquisitions?

So we haven't guided on it. But of course, it is a continuous -- the reason why we don't guide on it is that we had put it quite high up and then we land in a different place. We are very much focused also, within the infrastructure business on automation. And we are going to give you the full goal here, but we don't expect it to vary significantly. Maybe it was slightly upwards from this year, but not a lot.

Okay. And then my last question. Maybe, you can put some words on the activities within your Life Sciences today in terms of acquisition activities. What do you see in the market today? What is your appetite?

Well, we have -- as I have said to you before, we have a huge appetite for acquisitions. What I think we have done is we want to set the ship right for the journey. And maybe, that has taken a slightly more energy out of us than what we had previously expected. But we are certainly set for acquisitive growth. We see quite a lot of good acquisition candidates out there to go for. We also now have our acquisition margin on board to help out with that. So there's a really huge appetite. I don't know whether you want to add, Par.

No. I mean, I think the -- one of the many thing I've been impressed with this company is the strategy and the history of successful acquisition. It's not an easy task as, all of you know. But I think this company has fared definitely better than the average in the marketplace in terms of finding good acquisition targets and cautiously welcome them to the NNIT family. And I personally spend a lot of time on looking on new potential targets, and that is definitely to continue in 2022.

And we have a follow-up question from Poul Jessen, Danske Bank.

I have a few questions. One question is about public sector, which is down quite a lot. I was just thinking about mid '20, you were winning a number of contracts at the Tax Ministry and at the Danish Defense, which were friendly agreements and quite large. I was just wondering, has they -- have they not materialized into any revenue at all?

Yes, they definitely have materialized into revenue. The -- like, one example without mentioning any clients in specific, but they definitely have transformed to revenue. But I would say, in general, in public sector on the decline, I mean, it's partly a conscious decision, partly a market consequence. Because we have been cautious about going into public sector deals where we don't see that they could provide value close to NNIT. We always provide value to clients, but we have been cautious of entering to some new businesses. But at the same time also, there has been partly some decline in buying from the public sector in Denmark, that's publicly known. But the good news is that we see a change in that going into 2022. I'm actually fairly pleased by the pipeline we have, and there are actually some deals that are very close to closing, and we hope to get back to some good news down the line, but we'll see, but stay tuned.

Okay. And the backlog, looking into '22, Life Science is up 14%, excluding Novo Nordisk. Is that the growth rate we should look at because that's quite much lower than what we've seen in recent years you have also some acquisitions when it's going to give a full year impact?

Yes, I don't think -- in terms of the backlog, I think we're stating that it is quite impacted by the project work call. So that means, that comparing on a like-for-like with previous years is a little bit difficult. Otherwise, I would probably be alarmed looking at it myself. So the deals are coming in sort of much more near term to actually being carried out. So you can't make that link. It's definitely going to be a much higher growth.

Okay. And then -- okay. To speak about...

Okay. Let me comment on that as well. I mean, I think I take that on the positive note, actually, because looking at -- it's quite 2 distinct pipelines, if you look, for instance, on our infrastructure business. Very huge deals, going 5 to 10 years into the future. And then, looking at our Life Science business, which is a lot larger number of smaller deals, but that makes us less exposed to use the few deals to succeed. It's a much larger playing field for us.

And then, coming to the special items, which you indicate up to DKK 150 million. How much of that will be cash and noncash?

Yes. Yes, yes. So that's a very fair point. So part of it has to do with the fact that we are optimizing the use of this head off. And that, of course, is a noncash item. It's a pure impairment of this. And part of it helps you with, you could say, the off-shoring setup as well. And that's going to be cash-driven as well or cash as a consequence.

And that means how much is cash and noncash out of the 1 -- if it ends up in DKK 150 million?

Yes. But again, yes, if it ends up at DKK 150 million, then -- but that's a big if, Poul, but...

Okay.

Okay. Then it's -- 2/3 is probably going to be the right answer is cash.

Okay. And what's the changes for subleasing the impairment you made in Q2, and thereby reversing?

Yes. Yes. No, that -- to an update on that, it is not easy. I mean, there's nothing that I'd rather want than subleasing it. But this area, it is really not easy. So what is the likelihood? I mean, we have some that are looking at it at the moment. I think there is, in percentage terms, there's maybe 30% likelihood that we are going to have that rented out sort of midyear or just after the summer holidays.

And then, my last question, I know you're not guiding for '23, but should we expect continued special items in '23? Or is it '22 and then it's done?

Yes, it's '22 and then it's done.

Okay. And then, on the comments you made about M&A, that you had a huge appetite. What about -- are you in a good track in any way? Can you do what you want? Or do you have to be very selective because you don't have ample resources?

We have not been constrained by resources. We have, as I think I've told you, I talked to the bank about facilities to acquire. But we have been in German, under [Foreign Language], I think, is the word in terms of establishing sort of a platform for this. So of course, we have a certain constraint. We can't just acquire everything, and we are quite selective in terms of what we want on board. But I think, hope, you'll see quite a pickup on this front in the coming year.

And we don't have any further questions at this point.

Okay. So if there are no further questions, then let's move to the final slide. So this concludes our conference call. Further information regarding the Annual General Meeting on March 10 will be sent out. Besides of that, thank you all for participating in today's webcast. Feel free to reach out if you have further questions.