NRC Group ASA (NRC) Earnings Call Transcript & Summary

Welcome to the capital market updates and quarter 2 presentation for NRC Group. Welcome to all of you live here in House of Oslo and also a warm welcome to those of you participating on the stream. Let's take a short look at the agenda. We will start out by a short summary of second quarter results, and Ole will join me for that session before I will summarize our strategy to succeed as a leader in sustainable infrastructure. After that, we will go more into the details on what kind of measures we have done to improve our core processes and what kind of results it has given and then focus more forward on our strategy on how we are to succeed as a leader in sustainability. At around 11, our Country Managing Directors will join us and do a regional review of their countries, focusing on the status and market opportunities. And in the end, Ole will come in and present our capital allocation priorities and how they will impact short- and long-term value creation in NRC Group. At the end, Lene, our EVP of Communications, will host a Q&A session, and for those of you participating on stream, please write questions in the chat. Second quarter has been another strong quarter for NRC Group and the fifth consecutive quarter with improved results. We were able to grow our revenues with 25% compared to second quarter last year and our EBITA with 34% compared to last year. We had a strong order intake of NOK 2.7 billion being a book-to-bill ratio for the quarter of 1.4. Our operating cash flow is somewhat weaker than last year due to the steep ramp-up of activity. We have gone from NOK 1.2 billion in revenues from quarter 1 to NOK 1.9 billion in revenues in quarter 2, and this ramp-up is much steeper than last year. So it's natural that we are tying up more working capital. With a strong order intake throughout last year, we end the quarter with a record high order backlog of NOK 8.3 billion. NRC Group expects our positive operational and financial trend to continue. Our guiding for 2022 is unchanged. We expect that our revenue growth will be moderate to strong, and we expect the margin improvement to be moderate compared to 2021. Looking at our countries, it's clear that it's Norway and Sweden contributing to both growth and profitability improvement in quarter 2. We see a strong growth in Norway, and we see that improved operations in our environmental division is the main improvement in results versus last year. We also see good growth in Sweden, and it is the rail construction activities being the main driver for increased profitability. In Finland, we have a more stable activity level, somewhat lower results, but still strong results from our Finnish operations. We have somewhat lower activity and somewhat lower profitability as a consequence of that due to lower activity in our light rail business. And as you remember, we closed a big light rail project in Tampere last year. Our biggest light rail construction project, Jokeri, reached peak production in 2021. So this is an expected development while we're waiting for the new wave of light rail projects to come. We have been able to replace much of the lower activity with growth within rail construction, and we also see good profitability in this segment. Looking at our safety statistics, we see improved results. We have fewer accidents, and we have fewer accidents leading to lost time incidents. So our lost time incident frequency is down to 4.3, a good improvement from last year, and we also have somewhat lower total recordable injury frequency. We did have one serious accident in quarter 1. Luckily, we were able to go through quarter 2 without any new ones, and our target here is, of course, always to avoid serious injuries. Our sickness absence rate is increasing somewhat compared to last year, but this is mainly due to COVID-related effects in quarter 1. As we spoke a lot about in quarter 1, we see limited impact of the global economy, the rising inflation and raw material prices due to the war in Ukraine. We have a business model with mostly public clients where revenue side of the projects are indexed towards different construction cost indexes. We also have our procurement strategy of closing as much risk as possible early in the projects, and although we see effects of increased material prices in some projects, our total exposure and total impact is limited. Raw material prices are on the way down again, but they are still at record high levels. Ole will go through some more details.

Thank you, Henning. Financially, we had a solid Q2, and we have improvements in most of our finance KPIs. The revenue came in at NOK 1.9 billion, which is up 25% compared to the same quarter last year, and this was driven by a very, very strong growth in Norway of 58% and in Sweden with 34% on a like-for-like currency. Finland was more or less flat compared to the same quarter last year. In the first half of the year, we had a growth of 16% compared to the first half of 2021. Our profitability, which we measure as EBITA before M&A expenses improved with NOK 16 million and came in at NOK 63 million in the quarter, and this gave an EBITA margin of 3.3% compared to 3.0% in the first quarter -- sorry, in the second quarter last year. Let me give you some more flavor to some of the P&L lines. As you can see, the M&A expenses in the second quarter was 0. And as we see it now, we do not expect further M&A costs related to all projects in our books. The depreciation is coming down to NOK 45 million. This is in line with a strategy to have a lean asset base, and I will come back to this later on in the CMU. Amortization is at NOK 9 million. This is down from last year, but flat compared to the first quarter. And out of this NOK 9 million, NOK 6 million is related to amortization of PPE from the VR Track acquisition in 2019, and this amortization will be completed around year-end 2022. And the last NOK 3 million is normal amortization related to software investments. And also, you can see our net financial items is coming down to NOK 14 million and this was related to having less debt, and we will also discuss our debt structure strategy as well as our financial costs later on in the presentation. If you look at our order intake, it is very strong at NOK 2.7 billion. Isolated in the quarter, it's like Henning saying, is 1.4 book-to-bill. But over the last 12 months, it comes in at 1.3, which has been steady over the last period. The order backlog is record high at NOK 8.4 billion, and this is up 25% compared to the same quarter last year. However, if we break down the NOK 8.3 billion, you can see that NOK 2.7 billion of this is for delivery in the second half of 2022 and this is up 6% compared to where we were at the same time last year. So we had 60% growth in sales in the first half of the year, and we have an order book, which is 6% higher than we were at the same time last year. So we feel quite comfortable with our current guidance for 2022. We take our -- the sustainability is very important to us, and among others, we measure our taxonomy twice a year. The taxonomy ratio also highlights the uniqueness in NRC business model compared to other construction companies because we deliver sustainable infrastructure. And the analysis for the first half of 2022 show that 88% of our turnover is eligible and 69% of our turnover is aligned according to the EU taxonomy. And both of these ratios are up compared to the same quarter -- sorry, same period last year. And I will come back with much more financial data later on in the presentation, but for now, I leave it back to you, Henning.

Thank you, Ole. With 5 quarters of consecutive improvement in NRC Group's profitability, it's clear that our improvement works are yielding results. And we are now ready to go from a 3-year transformation phase to focus more on profitable growth, harvesting the benefit of our unique Nordic position and make sure we succeed as a leader in sustainable infrastructure. NRC Group is a young company, and especially in the period between 2015 and 2019, we had a growth at a rapid pace doing 14 acquisitions, expanding in 3 countries. And as many other companies experiencing fast growth, we did meet some challenges. We had to take big losses in quarter 4 2018 and quarter 4 2019. And it's clear that we were not able to integrate and develop our acquired companies in a fast enough pace. When I joined NRC Group in May 2019, my task was to restore profitability, and it was to improve our core commercial processes to make NRC Group ready to succeed as a Nordic leader within sustainable infrastructure. We will go through more details on what we have done for the past 3 years and the corresponding results later in the presentation. It's time to shift focus for NRC Group harvesting the benefit from our unique Nordic position and capitalize on the Nordic footprint we have. We will continue to improve core processes to improve profitability, but we will use more efforts generating profitable growth using the total competence and capacity in NRC Group to increase competitiveness and win more bigger projects. With improved results, we also have improved financial flexibility and we are ready to explore some bolt-on acquisitions to strengthen our value chain. So in short, NRC Group is ready to capitalize on our leading Nordic position. I believe NRC Group has never been better positioned to succeed. The demand for our services rooted in rail infrastructure and our strategy of executing projects in a sustainable way are driven by 2 strong mega trends. We have gone through 2 crises for the past 2 years, the COVID pandemic and the increased raw material prices. And we are coming out of these 2 crises with stronger profitability, more financial flexibility, a record-high order backlog and the market at record-high levels. So with improved core commercial processes in tendering and in project execution, we are ready to add on more profitable growth. NRC Group has a unique position in a big market. Looking at our national transportation plans in our 3 countries, the total market for maintenance and construction of railways are NOK 65 billion. And as market leader, we only have approximately 10% market share. We believe this market will continue to grow. There's a broad political agreement towards investing in sustainable infrastructure and to continue prioritizing sustainable infrastructure. And in a market with strict regulations and high barriers of entries, our opportunities are huge. NRC's business is rooted in rail infrastructure and the many acquisitions you saw in the early phase of the company was executed to build a full in-house value chain to be able to construct and maintain railways from A to Z. We have a strong position within all rail technical disciplines in all 3 countries, but what separates us from our competitors and what we believe is our strongest competitive edge is the fact that we also have the related civil works value chain in-house because demolition, doing concrete works, mass transportation is always a significant part of construction of railways. And it's a significant part of the complexity and it's a significant part of the risks associated to it. So by having this value chain in-house, we are better positioned to calculate our cost correctly, we are better positioned to understand the risk and mitigate the risks connected to these processes and we have a much bigger flexibility coming to the execution phase to adapt to the changes you will always see in these projects. We will show a video from our Nittedal station project, which should illustrate this in a good way. In a 5-day period, we are dismantling all rail technical equipment and the tracks. We are demolishing and recycling an old railway bridge. We are installing a new bridge that has been preconstructed at site with our own people while we are finishing to install rail technical works and the tracks afterwards with our own value chain. [Presentation]

I think this video, in a good way, illustrates NRC Group's competitive edge and our unique Nordic market position. No one can match NRC Group's geographical presence in combination with our value chain offering, and it's time to capitalize on this leading Nordic position and our improved core processes to fuel more profitable growth and to succeed as a leader in sustainable infrastructure. Sustainability has always been a part of NRC Group's DNA, and it's an integrated part of our strategy. And for us, sustainability is not nice slides. It's real actions that has already reduced our CO2 footprint and that has already produced several commercial opportunities for us. A good example of this is the NOK 400 million mass removal contract we won as a part of constructing Oslo's new drinking water supply. NRC Group's investment in trucks fueled by biogas put us in a unique position to win this project as the client's focus on reducing the CO2 footprint in the project is high. With our mass transportation trucks, we are able to reduce the CO2 footprint with this operation of 90%, going from 17,000 tonnes of CO2 to 1,700 tonnes. And our mass transportation activity is also the most significant CO2 footprint in NRC Group's portfolio. And our commitment to place approximately half of our conventional trucks to trucks fueled by biogas will also be an important enabler for us to reach our long-term target of reducing our CO2 footprint by 30% within 2025. With improved profitability, we are ready to focus more on profitable growth. Our medium-term target, meaning 2024, 2025, is to increase our profitability and our EBITA margin to the range of 4% to 5%. While long term, delivering in the interval of 5% to 7% on the EBITA margin. With strong order intake, good growth outlook for 2022 and also a promising order book for next year, we will, of course, target growth in 2023. But growth can be a bit volatile in our industry as big projects go into the portfolio and big projects go out of the portfolio, but over the cycle our ambition is to achieve an organic growth above 5% and then adding selective M&A on top of that. With improved profitability, a more flexible financial position, we target to resume our dividend distribution according to our dividend policy. And our commitment to sustainability stands firm as we presented on our last slide. So it's time to move from a transformation phase to leverage our improvements to succeed as the leading Nordic player within sustainable infrastructure. And in the next section, we will go more into the details of the measures we have implemented and the corresponding results before looking forward and presenting our focus for the future. If you look at NRC Group, our business can be divided into 2 separate activities. It is the project business meaning rail construction, civil construction projects in Norway, Sweden and Finland, doing medium- to big-sized projects between NOK 30 million and NOK 1 billion. Typically, the duration is between 3 and 36 months (sic) [ 6 and 36 months]. In this category, we also put our environmental business, typically a lot smaller project and shorter duration, but still project industry. On the other hand, we have our long-term contract business portfolio. This is more recurring revenues. It's connected to the rail maintenance operations we have in Sweden and Finland, and it's related to the third-party material supply agreement we have with the Finnish Transport Agency in Finland. We see close synergies between these 2 business models. First of all, our maintenance business gives a scale to our machine operations, which means we can also provide efficient machine services to our construction projects. The maintenance business is also smoothening out some of the seasonality in our construction business as we can use some resources from our construction projects in our maintenance contracts during wintertime. And the third element, being the obvious, we are all talking about rail technical work and the competence related to that. When NRC started to meet challenges back in quarter 4 2018, this was mainly related to our project business and that's why we will spend most of the time explaining what we have done and the results there. But before we do that, let's take a short look at our long-term contract business. And as the name tells, this is mainly long-term contracts, typically 5 years plus additional option years, giving us a good visibility both on the revenue side and the margin side. The past 12 months have been extremely important for us in this business as we have been able to renew more than 2/3 of our existing contracts for a long period of time going forward. Last summer, we were able to renew the rail supply of materials in Finland with another 4 plus 4 years. And for the past 4 months, you have seen that we have won 3 out of 3 Swedish maintenance contracts out for tender, and with a position before entering this tender cycle in maintenance having 4 contracts, these 3 wins have been extremely important for us to maintain a decent size of this business and have scale to continue to grow and increase this profitability. With 2/3 of our contracts renewed for another 4 to 5 years, we can be more forward leaning. It's only opportunities to grow, and operational leverage is important in this segment as we can take on more contracts without increasing our overhead in a significant way. Now let's take a look at the project business and the measures we have implemented there. It's mainly related to 4 different actions, and it starts out by attracting the right leadership to drive this business forward. We need a management that shares our view of how you are designing a successful modern construction company by having strong commercial processes, having robust processes within tendering and project execution. And we were able to strengthen our management team during 2019 and 2020, and I believe we have a strong team in place to continue to drive the development of NRC Group. After having the right people, it's about implementing processes we know will work. And the tender process is extremely important for a construction company: selecting the right projects, calculating the cost correctly, understanding the risks and opportunities to get a balanced risk in your portfolio. These processes goes faster than in the project execution part due to fewer people being a part of these processes, and we can change faster. And we have seen significant results from these activities that we will present today. Project execution is, in nature, a more long-term process and it's about the education, training and mentoring we give to our people every day in the projects in order to prepare them for the challenges that always we'll meet in the projects. So we will continue to work on this and it will gradually yield results as we move along. Sustainability and the integration of sustainability in our operation has given us clear results already, and we want to continue that focus going forward. It is clear when you look at the development of NRC Group that the loss-making projects won before 2020 have had a negative impact on our results. We had to take big losses in quarter 4 2019, mainly driven by the Norwegian rail construction portfolio and the Swedish rail and civil construction portfolio. But these projects proved to be more complex, more resource demanding and also more financially demanding than what we were able to see back in 2020 when we had our capital markets update. It has been necessary to take further losses, both in 2020 and 2021. However, we are now finished with these loss-making projects. Looking at this graph, you will see revenue in NRC Group. The share of revenues coming from projects won before 2020 in green, projects won after 2020 in black and revenue coming from environment and maintenance in the white square on the top. And it's clear as more fresh projects come into the portfolio, our profitability is increasing. Looking at quarter 2 this year, 15% of our revenues still comes from projects won after -- won before 2020. And looking at the backlog, we will also see that 15% of our current backlog comes from projects won before 2020. However, these are healthy, profitable projects, mainly coming from light rail revenue in Finland and a big project in Norway, Nykirke-Barkåker, an intercity construction contract we won late 2019. We still do have exposure as a 20% owner as of the AGN Haga project company in Gothenburg. It's treated as a financial investment as it is an associated company. It's not a part of our reported order book. It's a challenging project. It will still continue for some years. And it is fair to say that we have some exposure, but our ownership is fairly limited. Looking at the improved processes in tendering and project execution, we can clearly see the results of increased profitability in our construction portfolio in projects won after 2020 in black versus the projects we had in our order book won before 2020 in green. And after spending 15 years in the construction industry, I've seen several project portfolios across several companies in the industry. There's one key to deliver good profitability in construction: that is to avoid or minimize loss-making projects. And this is closely connected to the robustness of tender processes. Looking at our old project portfolio, we had 23 loss-making projects with accumulated losses of NOK 240 million. While looking at all new projects won after 2020 above NOK 30 million, we only have 4 loss-making projects, but more importantly, the accumulated losses are only NOK 13 million. This is a huge improvement and it's instrumental for us to build better profitability in NRC Group. For those of you remembering, well, we presented a similar analysis back in quarter 3 2021. That was focused around the areas we struggled most being rail construction Norway and rail and civil construction Sweden, where we showed a 7 percentage point increase in that portfolio. This sample size is more than double the size. It's also covering civil construction in Norway, light rail construction in Finland and rail construction in Finland, which has been profitable projects for us all the time. And when we look back at the portfolio on new projects in the areas where we struggled the most, where we saw the 7% improvement in quarter 3 2021. The profitability has continued to improve in that portfolio. Another important KPI we are following in NRC is the net project adjustments we do each quarter. As you can see, we have a very positive trend going from big negative project adjustments from 2020 and early 2021 to positive project adjustments. When you have big losses arising during construction phase, it proves that you have unbalanced risk in your portfolio. You have too weak control processes since you are unable to identify this before it shows in your P&L and have not been able to mitigate risks. Now we are where we want to be. We see that profitability is increasing during construction. We have much better control processes. We see that the project profitability is increasing. And this is a sign of better risk balance of our projects. It's a result of better tender processes. It is also a result of better control processes and better execution. In total, this gives us better financial predictability. I really like this graph. It shows that we are improving and that we have been successful in implementing our improvement program in NRC Group. And it's time to start leveraging our improved operational processes, exploiting and harvesting the benefits of our unique Nordic position. And our strategic priorities going forward, it's still to continue improving core processes, improving profitability. This is a core of all construction companies, but we are ready to add on more profitable growth by focusing more on bigger projects, by focusing on increasing competitiveness by using our total Nordic muscle, allocating competence and capacity where we get best paid. With improved profitability and increased financial flexibility, we can also start to look at some M&A opportunities. And the work to integrate sustainability to our operation will, of course, continue going forward. Growth is important, but we will never sacrifice margins to grow. The growth needs to be value creating. The growth is important to be able to develop our organization. Taking on new, big, complex projects is the best way to retain our competent employees, to develop them and to attract new talent. And with our business model, growth will also give us operational leverage improving the overall margin for NRC Group. And operating in a NOK 65 billion market, if we succeed here, our opportunities are enormous. Winning the right project at the right price, I think I talked about it 500 times in the past 2 years, but it is the core of a construction company to have solid commercial processes. It's nice to see an improvement of profitability till 2.8%, but we have much higher ambitions and the winners in our industry is those that handle these processes best. So this will be a continuous focus for us going forward. But as said, we will be ready to add on more profitable growth and one measure is to focus more resources towards bigger projects. This will yield several benefits for us. First of all, by using our most experienced and competent people on bigger projects gives us better operational leverage. It's a key to retain competent people, but it's also a key to develop our younger, more talented workforce. By working side by side with our experienced people, we also increase our long-term growth capacity as we are able to train and develop younger talent faster to take on more responsibility. Bigger projects is also important to realize the benefits of Nordic collaboration. Working together day by day, that is the best way to transfer competence. So doing bigger projects, you need to have bigger projects in order to actually do this, to make sense of it, that is an important part of our strategy. And of course, we do look at the competition and our statistics are clear. There are fewer competitors on bigger projects, meaning we should increase our hit rate in tendering, and the likelihood of winning with a decent margin should be better in this segment. Doing bigger projects will also speed up our sustainability strategy. As in bigger projects, we can put on more resources to develop cutting-edge solutions for our clients. Trønder-Meråkerbanen is a good example where we have done a redesign of the foundations of the catenary system in order to reduce the CO2 footprint. And in this project, we have reduced the footprint in this operation by 48%. And when you are constructing 2,500 fundaments, then it matters. Most of NRC Group's growth going forward will still come from organic growth, but with improved profitability, better financial flexibility, we are ready to investigate some opportunities on the M&A side. We are looking for small- to medium-sized companies, mainly in the subcontractor segment that then join NRC Group and strengthen our value chain or strengthen our local or regional market position. And we believe NRC Group to be an attractive owner of such companies for people who still want to develop their company in an industrial way going forward. An important part of increasing our competitiveness is to work with Nordic collaboration across our 3 countries. We have been very focused on improving core processes in our separate countries, but now we are ready to also utilize best practice sharing across countries. The key is to share competence and capacity and allocate resources where we get best paid, especially cooperating to win more big projects. But as said, it's also a key to be able to share these best practices to work together and big projects is the best solution for that. We will also target other processes to implement best practice sharing, tendering, being an obvious one where we will compare tender strategies across other countries, compare capacities, understand why we are calculating with different capacities and identify our opportunity to improve. Maintenance is another key area for us where we do more or less the same operation day by day in Sweden and Finland, although in a bit different contractual setup. But Nordic collaboration will be an important initiative to improve efficiency and improve profitability of our maintenance business. And digitalization, of course, using or having a common strategy and pooling resources in digitalization, Nordic calibration will make a lot of sense. When it comes to sustainability, our clients and also our own organization is at different stages in the journey on converting to sustainable production. And we will utilize these differences to speed up our own journey to be ready to capitalize on the commercial opportunities that will come across our markets. Now we are ready to start the regional review. Before letting Arild, Harri and Robert to take place here, we will do a short glance at our total market. As said earlier, we operate in a large market, driven by strong mega trends. The annual investments and spend on maintenance in our market is NOK 65 billion according to the National Transportation Plans. We are in a unique position because these are long-term trends outlining the investments and the projects to be done for the next 12 years. In these plans, the market growth is expected to be 2% in real terms. And the normal process is that the governments will do a yearly inflation adjustment of these figures before approving the final budget. However, in this inflationary environment, it might be too optimistic to assume this to be done, but we are confident that the market will still grow. There's a broad political consensus to still prioritize sustainable investments, and we have a combined rail maintenance backlog of NOK 80 billion across our key markets that cannot be neglected. Our countries had different starting points for their transformation journey, and we are also in different stages of our transformation across our countries. We have been able to restore profitability in Norway, and we believe we are ready to start focusing on more profitable growth. Sweden was the country hit hardest back in 2019 and has also experienced the most challenging market since then. We have improved profitability but we are not yet back in black figures, and the main focus going forward will still be to improve profitability. In Finland, we are a clear market leader within rail infrastructure and we are the clear market leader when it comes to profitability, and our goal is to continue profitable growth and to continue to deliver profitability on a very high level. So Arild, it's your turn to take a short overview of Norway.

Thank you, Henning. Yes, my name is Arild Moe. I'm the Managing Director of our Norwegian organization, joined NRC November 2020. Before that, around 30 years in the industry. I will give a brief overview of the status in Norway and how we are looking into the market going forward. First, as you have been through, the performance at this time in this quarter is 2.9% based on the last 12-month duration. It's okay. It's not on the level we like to be. We have even higher ambition, of course, and the possibility should be good to increase that even more. We can see that we have had 1.5 year struggling with losses, mainly driven by Norsk Saneringsservice in 2020 and also some project from earlier phase in rail and the turnaround case we have been through in 2019. Today, we are in a better position, and we think that we should improve this performance going forward. We have 3 divisions. The biggest division is our environment division, where the revenue is nearly NOK 1 billion. If you look to rail and civil divisions, they have a revenue of about NOK 1.2 billion yearly. They are doing projects standalone, but part of the revenue in civil should also be linked to the rail divisions because they are doing a lot of internal joint venture projects. Order backlog on NOK 2.3 billion is also quite high for us at this time, and with a good market, it should be possible to increase that even more. Let's look more into the divisions we do have. Rail is the biggest division if it comes to the market and the possibility to increase the revenue going forward. We are able to do both medium-sized projects from around NOK 50 million up to the biggest project, which are in the market around NOK 2 billion. We have capacity and competence to do the turnkey contract, which is quite new in this market. We have 1, 2 or 4 projects, which have been in the market in the last 3 years here. And we do have all the capacity on all technical issues to build railways. And in Norway today, we have a position 2 in the market. Civil construction is a very fragmented division and market. We are more, I would say, a niche operator in this market. Very big -- high position on top in harbors and quay side project and for groundworks, especially related to concrete works, and for this case, also then in connecting to rail construction projects. We are trying to search defined projects, which are too complicated for the small players and maybe too small for the really big players. This means those projects will be around NOK 100 million to NOK 500 million, which we are looking for. When it comes to environment, our biggest division, we have our mass transportation company, Gunnar Knutsen, which have a #1 position in our market. And we have also a top 3 position in demolition and recycling market in Norsk Saneringsservice. We have been through both somewhat from Henning and a video from Nittedal, not one of our biggest projects, but maybe one of our most complex projects we have had the last year. We will finish this project this autumn. Just to explain a little bit about how we can use our common strong vessel to do this project, this is a project we are building new double track through the station area and new platforms while the traffic are running on the railway. We had some shutdowns during this project. We are stopping the work and then build up new things. For this project, we have done all the technical issues for rail construction, all disciplines in-house. We have done all the civil works related to groundworks and concrete works, bridges by our civil divisions. We have done the mass transportation by Gunnar Knutsen and the demolition work with Norsk Saneringsservice. And what is important in this project is, of course, then to have all these internal resources, which give us flexibility to do this project in a good way. Yes, the same picture as you have seen from group also from Norway. We have been in this situation in 2020, where we lost a lot of money in the Norsk Saneringsservice. But already in 2021 there we are at the 0 level and we suppose them to be -- to contribute a lot to the -- both the revenue and the results going forward. We also see that we have finished a lot of those projects taken under the old system, and we have organization and tendering work and execution procedures before 2020. We have a lot of new fresh projects, although we have a big project, Nykirke-Barkåker, which is in our order backlog, but that is a profitable and good project. To sum up for Norway. The most important we do, I think, for all countries is to build strong project teams. We have focused a lot of that in a couple of last years, also supported by our support function from the head office so they can support them in the execution phase and also build good systems, both for project execution, tendering works, and at least this most important, risk assessment systems. Our project priorities in Norway is also to have bigger projects, both in civil and rail construction. As I said, in rail, up to NOK 2 billion; and for civil, up to NOK 500 million. And also do -- or identify projects that we can use our internal power to, in turn, joint venture and Nordic collaboration across countries, which we already have done. The last focus is to -- in environment is to be still a strong player in the niche market, both for [indiscernible], and increase that strong position even more if that should be possible. If we get to the tender pipelines in the next 9 months, we have identified for us around NOK 7 billion in the market we should be able to tender for. Around 28 projects over NOK 30 million. Of that, 9 projects over NOK 300 million. And these are projects that are coming in and out. Going forward, based on how we see our competitive edge in the project, a lot of interesting projects. And I think they are more about choosing the right project, as Henning said, then we participate in all these. So the market is very high. It's even NOK 1.2 billion higher than it was last quarter this year. This slide shows then the market -- the total market in the long-term forward around NOK 27 billion, NOK 28 billion the first year, so up to NOK 30 billion in end of this period. This is mainly taken from the Norwegian Transportation Plan. Besides that, we have light rail project [indiscernible] and light project for Byvann in Oslo, which will come on top of this. We think that most of these projects, hopefully, for just the [ BOT ] transportation system railway will be a part of what we are going to do and the public financial will be into this market. So far, we haven't heard anything from the politicians that not will do the priority to these markets. I think that was a brief short trip to Norway, and then we should go over to Robert then, our colleague in Sweden.

Yes. Thank you, Arild. So hello. My name is Robert. I joined NRC in September 2019. I've been in this industry for 35 years. So I have done a few things again this year. So let's go to profitability since most of you will probably wonder when will Sweden be profitable again. If you look at the graphs and the history, it's clear we are and we have been through a very extensive turnaround. That's clear. And we see now -- we finally see the first results. We are climbing up. And I believe that the measures we are doing, the initiatives we have will continue to show progress going forward. We are not ready yet. We still need time, but we are on the right track. And that is very, very positive. We have had a very strong order intake in the last 12 months driven by the rail construction, you heard Henning also saying it. And we have had a great win this summer. We won 3 of our rail maintenance contracts. We won them back and to have 3 of your own contracts at the same big time in the market, that is a challenge. So we are super happy for that and that gives a very strong foundation now for us to grow and continue and expand in the maintenance area. We also have a full occupation this year. So all our divisions are fully occupied in '22, the luxury position even if it's a bit sweaty sometimes, you have too few jobs or you have too much, but you're never happy. It's like the farmers. Anyhow, going forward, I look -- when I look into '23 also and the pipeline that we have, I think that we in '23 will be able to meet '22, hopefully maybe even exceed it a bit. But we will see, now the tender race is starting for '23. It starts now. So now we are tendering heavily for '23 and '24 going forward. The Swedish market is a very competitive market. It is a market that has been tendering products and maintenance for 20 years now. So Sweden is probably the most privatized market, deliberated market. Everything is deregulated in Sweden, train operations, maintenance projects, trams, everything to see. That means it's also an available market. So that is very positive. We are also seeing -- and let's say it in this way, you have heard several times, probably also from Henning, it's a very competitive market and it's a very sharp pricing in the market. That's what we see. So then we also see now when we analyze our hit rates today and we see the results, we actually see that it looks like the suppliers are reflecting now the risks in the projects, the risk profiles and also the contractual demands. We are not the only one who have had bad projects and lost money. So I think the suppliers are a bit reflecting and that's also reflecting that the prices are slowly a bit going up. I hope that can continue because it shows that we can have a profitable growth where the price is more right. Nobody knows what the right price is. But when the price is more reflecting the risks and the profiles, then it's more healthy. So we have also a strong position. We are #3 in rail and in maintenance, rail construction and maintenance. That's a strong and good position. We have also high ambitions. So being #3 means we can be #2. Being #2 means we can be #1. So we have room to improve, and we are fighting for that. Looking at civil, we are more a niche player. We are a bit different from my colleagues in Norway. In Sweden, we are more niche. So it's civil rail that we're focusing on or a niche market more located in environment in Karlstad where we have our civil department. So that's more small projects, local projects, also private clients. Going forward, this is a nice picture. Some were very sweaty yesterday to put in the last picture. What you see here is the future shunting yard in Norrköping. This is how it looks before there is a new shunting yard. This is a new shunting yard that is the start of the new high-speed line in Sweden between Stockholm and Malmö. So to give room for that, where the today shunting yard is, they have to build a new one so they can demolish the old one and start doing the civil works and construction work for the new high speed line, and we are doing this one now. So this is a typical midsized project in Sweden where rail and civil is integrated together, a bit like knitted all, you can say. For us, this also shows that it gives us the synergies when we can integrate already in the calculation all the production planning, execution planning in the tender stage. We have a competitive edge when we have it in-house and we can use our best knowledge, our best people. And we did, and we had a great success. So we won this one. So we are focusing on projects like this, where it's a high complexity or where we can utilize our resources. So improved profitability. In a way to give you a little bit more flavor, as I said I joined NRC in '19. The company had some challenges. We had some things where I will give you a little bit highlights on it so you understand what we've been through. First, we have the integration between NRC and VR Track was not completed yet. So we had to put in some work on that. During quarter 4 '19, in our team we discovered that we had several projects with very significant challenges, financially and operationally. Really, really tough projects. And also we discovered and understood that we also have to improve our management, our management skills capacities and our processes. We have to improve them or even sometimes take them in place. And all that had to be in the same time in parallel, full speed ahead. So develop, fixing, executing. And we knew that was a huge challenge, and it was. So we knew it. We had a plan. But I have to say, when I'm standing here today, it was much more than I could guess at that moment. It was much, much more. But we have done it, we are through it. And we are very, very happy for being where we are today. Again, we are never ready. We are never finished. And we will continuously work on this. But to be here now and have what we have accomplished also behind us and with us like a solid and stable tender process, so all divisions are very stable. As Henning said, that is the starting point. Win the right project, that means that the tender process has to be stable. We have a solid and stable operation and maintenance, which is profitable. We see that our new projects and also mainly driven in the rail construction from 2020, they can even perform a little bit better than we believe in the tender stage. We can slowly increase our margins quality. And most important of all, we are finally done with all these old s***** projects to be honest. They are gone. So I'm very happy. And we are continuing our journey going forward. So what do we do then? We have said it many times, we talk about project management, talent, our people. So we focus a lot on our people. Already what we did in the turnaround is continuously we are working on. So we are developing and training our people constantly: leadership, our values, commercial mindset, commercial thinking and safety. These 4 things are cornerstones for everybody in Sweden in NRC. And that we do constantly because that puts us on the level where we want to be. To that, we are training also our operational people, of course, a bit more detail when we talk about project management and project execution. So from our side, it's a lot about production calculation, production execution, cost control, contract management, know how to invoice your client. It sounds maybe strange when we say it, but really it's also about how to invoice our client. We do a lot for them, so they have to pay for everything also. And then, of course, the supply chain: purchase, predictability, being controlled forecasting. Nobody likes to have the late surprises. I don't like them. Henning, for sure, doesn't like them. So if it goes to head, we'd like to know it early, then we can do something. And of course, the risk management, mitigating risks. So that is what we do in all divisions. Then we are focusing now from the platform we have with the maintenance to grow, speed up. And we are tendering, we have some tenders in for new contracts, so we can grow and develop the business. And then we have another new area we haven't addressed yet. We had hoped to be there maybe today, but we are not and that's the SL business, the tram in Stockholm, the metro. It's a very huge market, second market in Sweden. We are now prequalified to tender there for their upcoming big maintenance contracts, really big ones. I know some of them because I've been working there for 15 years with that contract. But since COVID-19 came, of course, that also affected the SL. So they closed down for 2 years. That's why there is a huge delay. So these contracts will not start before '24, but they're coming out for tendering now. To this, I will also like to address the fact what Henning has touched and we already do, the fourth and very big pillar, we can both increase our profitability and grow together. That's together NRC Group Sweden, Finland or whatever we say it in which way. We together can source the right products in the market, maybe where we fit our capacities best or where the profitability is the highest or where we can develop the best. But we have great opportunities when we do it together because often stand-alone in a country, you can't do everything. And you see it in the tender pipe. There are so many opportunities, so big projects and then maybe it's better to be selective to choose 2 in 1 country and stop in some other countries with the resources we have while we are still growing and expanding. So that is what we foresee, great opportunities. I will not talk too much about this. You have seen the facts, you have seen the figures. There is more than enough to tender for. So we are selective, be in the right project. There is no shortage of projects to look at or tender for. So I would like to summarize Sweden a bit before I hand over to the next speaker. The pipeline is very big in Sweden. The driver in investing in rail infrastructure is what Henning has touched: in Sweden, it's clear the railways are part of the Swedish goals for reaching the climate goals 2045. And that has to be done. And it has to be done by the railways taking a bigger part of the transportation system in Sweden. So it means it has to be less trucks on the road. It has to be less airplanes in the air. It has to be more transport. So that means it will be built new lines in Sweden, it will be upgraded from 2 track to 4 tracks and 4 tracks will be upgraded to 6 tracks. It will build high-speed lines. And all that has to be done to reach the climate goals. And this means it's a broad political consensus in Sweden about this. Regardless if you're on the right wing, left wing and fight about everything, they at least in this point agree because there is no turning back. And this is a global trend. We have to get into the fossil-free future. The sustainability goal has to be reached. We have to have a future for our kids, the future young and such. And I think -- as NRC, I think it's fantastic. We can work in the industry we love, we can do good projects and we can also be contributing by doing this that we have a future that we are proud of in the future. And this is a super big market. So NRC has a great opportunity, and I stop there. Thank you. Harri?

Okay. Thanks, Robert, and hello, everyone. My name is Harri Lukkarinen, and I'm Managing Director for Finland. I joined NRC through the acquisition of VR Track back in 2019. Then let's move on to Finland. So in Finland, we have a solid organization of about 1,000 people. And the core management team is mostly same as in 2019 strengthened by some new recruitments. Our track record is solid from a profitability point of view, and we will continue to contribute -- to deliver on a good level going forward, although maybe not as high as level -- as in 2021 margin level at least constantly. The order book for this year is strong, and multiyear projects give us a good starting point for next year as well. The most part of revenue comes from rail construction including railway construction and rail construction and rail maintenance, which are strongly synergistic. And our expertise covers the whole scope of rail technology, which is our competitive advantage. In Finland, we support also railway-related material services for external customers, which also support our own construction and maintenance projects. We are the #1 player in rail infrastructure in Finland with growth opportunities. In rail construction, we are the market leader as our expertise covers the entire track technology, including also electrification and signaling systems. Last year and this year, we have won the largest multi-disciplined railway yard projects like Joensuu and Kuopio railway yards and construction of 2 large raw wood terminals, as an example. According to the National Transport System plan, investments in railway construction and renovation are increasing. So our purpose is to take advantage of our strong position in the market in seeking growth by also strengthening our civil construction-related capabilities. Then maintenance, the competition for railway maintenance areas has been tough and new players have joined during last 3 years. Our market share fell after we narrowly lost some areas, which we used to have before. Right now, we have 3 of 4 electrical maintenance areas and 4 of rail track maintenance areas. But next maintenance areas, which will be tendered are currently held by our competitors. So that way, those tenders offer us an opportunity to regain our market share in maintenance. In light rail, we are involved in 3 or 4 major light rail network construction projects, which has quickly given us a strong foothold in fast-growing new market, which is synergistic with our core expertise related to railways. If you talk about rail technicals works, we are a clear leader in the light rail market. Actually, we have won all alliance light rail projects we have competed on. And during the strategy period, several new major light rail projects are coming up for tender, where we can utilize our strong position in the market. Last year, we won Joensuu railway yard renewal project, which is actually one of the largest single contracts on Finnish railway network for years. The railway yard and station area will be completely renewed to meet today's requirements and traffic needs, and the project includes all aspects of railway technology as our know-how. And the works are carried out in the middle of busy train traffic, which we have experience with. So I think that this project is a good example of multi-disciplined demanding project where we can utilize our strengths competitively and successfully. This year, we won similar, but a smaller, about EUR 25 million project for renewal of Kuopio railway yard. We have improved our profitability last 3 years. In project business, profitability is based on solid tender calculation and project execution, which we have developed systematically. On the other hand, due to the dynamics of project business, it's important to constantly ensure efficient use of resources. Our profitability is driven by light rail and rail construction. The maintenance business is delivering stable results, however, still at too low level. So in maintenance and in machine operations, we have quickly adjusted our -- the amount of our resources in accordance with our decreased market share while still ensuring our opportunities to tender and win new maintenance areas and regain our market share. Then the material business, it's more of a process business, which continued to be ensured by winning nearly 5 years materials service agreement, which started this year. Our goal at NRC is to deliver profitable growth. In rail construction, we strengthen our value chain in capabilities within civil construction disciplines to be able to increase our market share in civil construction projects related to railways and in selected projects outside railways. During the strategy period, several new light rail projects will be tendered for which we have already started preparing, utilizing our strong position in the market and expertise developed in successfully implemented projects. In maintenance, we continue measures to improve profitability and prepare for coming maintenance area tenders, which offer opportunity to regain our market share as they are currently held by competitors. And in addition, we contribute to Nordic collaboration to be even stronger together to renew large projects in the future. Compared to previous years, visibility of the tender pipeline has improved also in Finland. The total tender pipeline have developed positively from Q1 to Q2, driven by maintenance and those mentioned maintenance areas. Almost all of the projects included in our tender pipeline are very relevant to us, thus, that way we are able to tender them competitively. And in addition, high investment level for light rail projects is expected to continue in the coming years. Then light rail market, how it looks like. We have won all major light rail projects implemented using the alliance model in which we have participated in tenders. Now several new light rail projects are in design phase. Total value of those new projects is over EUR 1 billion. Implementation decisions have been already made for some of them, and the decided projects are also planned to be implemented using the alliance model. Preparation and bidding processes are long in large alliance projects. So potential revenue impact from new projects starts from 2024. In addition to the projects shown in the picture, the Helsinki and Tampere regions have long-term plans to expand their light rail networks significantly in the future. The National Transport System Plan shows a stable long-term growth in financing of railway investments. And in addition, planning of totally new railway connections funded outside the national plan are ongoing between Helsinki-Turku, Helsinki-Tampere and east of Helsinki sections. So that's how I see our situation briefly in Finland. And I guess that now I hand over back to Ole.

Thank you, Harri. I will, over the next few minutes, walk you through our financial strategy and our financial priorities areas to strengthen our value creation in the company. As Henning mentioned earlier in the presentation, NRC Group is a young company. We've gone through a consolidation phase and a transformation phase. And with improved performance, we're now entering a new phase where we will capitalize on our leading Nordic position. During the end of the consolidation phase, we saw a dramatic drop in profitability. In the last 2 years, the management have focused to regain control and improve profits. And as you can see on this slide that we managed to keep our turnover around NOK 6.4 billion, but at the same time, we managed to get our margin up to a respectable 2.8%. However, we want more. So where do we go from here? Our core financial priority is to support continued profitability improvements as well as expected organic growth. In addition to this, we now aim to better manage our balance sheet with a goal to return more free cash to our equity owners. Operational restructuring takes time. And as mentioned several times during the CMU, you gradually have to renew your order book, basically getting new project at healthy margin and replace the old loss-making project. An effect of this is gradually yielding results, as you can see on the graph to the right. Over the latter part of the transformation phase, we saw a solid financial recovery, and our EBITA measured over the last 12 months came in at NOK 177 million in Q2. And very good news now is that we're also starting to see solid growth, especially in Norway and Sweden. Our order intake and our order backlog is at record high levels, and these support further growth. The rail infrastructure market is also looking very strong. And so far, we have not been impacted by the uncertainty in the global economy as well as the war in Ukraine. In addition to this, we have previously analyzed our sensitivity to increase material prices as well as inflation and our findings is that our business is well protected, especially short term, but possibly also medium term. One more comment also related to our order back -- sorry, our order backlog and the risk in the order backlog. Please note that more than 90% of our order backlog is to public customers. And we believe that public customers are less likely -- or it is not likely that they will postpone or cancel any project related to financial uncertainty in the world. In addition to this, public contract nearly always have inflation process adjustments attached to it. In NRC Group, we also have a strategy to have a lean asset base. And by lean asset base, we mean 3 things. First and foremost, we want to maximize the utilization of our assets. The second is that we will prefer to have leased assets over owned assets. And the third area is that on special equipment, we will rent it from project-to-project basis. This is a long-term process, but as you can see on the left-hand side, which measures our depreciation versus revenues, it goes down. And on the right-hand side, our tangible assets and our leased right-of-use assets, compared to revenues, is also going down. And when these graphs are going downwards, it's a signal that we are getting less asset intensive. Going forward, we will evaluate further improvements between the countries as part of our Nordic collaboration strategy. However, we just want to point out that we have an opportunistic approach when it comes to asset investments. And by that, we mean that we will not compromise on business development. Another area where we have a lot of focus is working capital management. And as we have a lot of public contracts, they are quite fixed and there's a limit to how much we can drive down the net working capital. But still, there are always room to improve by focusing on having the right internal processes as well as the right internal culture. The positive flip side of this by having a lot of public contract is that our counterparty risk in our accounts receivable is limited. On the left graph, you can see the net working capital development during the different quarters. And as you can see, we are building up quite a lot net working capital in the second quarter of the year while we release this during the autumn and the winter season. And the reason for this is that, as you heard earlier from both Sweden, Norway and Finland, we have a lot of activity in the late spring period and during the summer. On the graph to the right, we have taken out seasonality by giving you the average over the last 4 quarters. And as you can see, it has been steadily improvement over the last 1.5 years and this is telling us that we're doing the right things within working capital management and also improving our cash conversion cycle. Early in the presentation, Henning mentioned that we had minus NOK 90 million in operational cash flow in Q2 and that is all related to the seasonality in the net working capital, as mentioned on the previous slide. If you measure the operational cash flow over the last 4 quarters, you can see this is a steady improvement over the last few years and is now running around NOK 350 million to NOK 400 million on an annual basis. It's also -- our cash flow from operation is also steadily being higher than at our EBITDA, and we are satisfied with this performance. If you move to the slide -- or the graph to the right, you can first see that our cash flow from investing activities or our CapEx is very limited over the last 12 months and that is partly related to our strategy to have a lean asset base. But despite this, you can also see that we have not been able to generate more cash on our balance sheet. And the reason for this is that during the transformation phase, we have prioritized to have a solid cash position in our balance sheet as well as a steep down payment profile in our bank debt. But as we're now moving into a new phase, we will prioritize differently. Moving over to our financial position, which at the end of June is robust. We have a bank debt of only NOK 364 million and a bond debt of NOK 600 million. The bank debt installment profile is approximately NOK 35 million per quarter and it falls during Q1 2024, while our bond debt falls due in full in Q3 2024. So if you go down over to our liquidity side, we have more than NOK 400 million cash on our bank account, and we have an undrawn credit facility of NOK 200 million. This means that we have more than NOK 600 million in available liquidity. And please note that this is actually on the peak of the working capital cycle. So as such, with improved profitability, we believe that we now are somewhat overcapitalized. And therefore, we are in the process to align our debt structure with our updated strategy as presented today as well as our current profitability levels. And the goal here is obviously to reduce the cost of debt and create more financial flexibility. We have a long-term leverage ratio target to be below 2.5x EBITDA. And as you can see, we have now gradually come down to this threshold due to a combination of improved profits as well as paying down our debt in the period. We believe our financial position is now sufficiently robust to increase the free cash flow to our equity owners and resume dividend payment possibly already based on the 2022 numbers. And in addition to this, we want to build some financial headroom to execute bolt-on acquisitions. So to summarize our capital allocation priorities. First and foremost, we want to support the existing activities and continued profitability improvements. In addition to this, we expect organic growth related to our current activities. Secondly is that we want to continue optimizing our capital structure and manage our balance sheet. And by that, we mean continuing managing our working capital and having lean asset base. And in addition to this, we now also want to align our debt structure with our current financial position and our updated strategy. And lastly is that we want now to increase the free cash to our equity owners and resume dividends. And with that, I hand it over to you, Henning, to summarize this.

Thank you, Ole. As we have presented, quarter 2 was the fifth consecutive quarter with improved results for NRC Group. And our expectations for the future is that our positive financial and operational development will continue. Our medium-term target is to deliver EBITA margins in the range of 4% to 5% and reaching 5% to 7% in long term. With a strong order intake, record high order book, we believe to have a good growth rate in 2022, but also well positioned for growth next year. Through the cycle, our target is to deliver an organic growth rate above 5% and then, of course, seek to do some bolt-on acquisitions on top of that. And as Ole said, with improved profitability, improved financial flexibility, the target is to resume dividend distribution according to our existing dividend policy. And our commitment to sustainability stands strong. We are well on track to reach our 2025 ambition to reduce CO2 emissions by 30%. The strategic focus going forward is centered around continuing improving core processes, to improve profitability, but we can take new steps to generate profitable growth by focusing on bigger projects and by increasing our competitiveness using our unique Nordic position to drive increased competitiveness. We will explore some acquisition opportunities, and we will continue to integrate sustainability into our operations. So as a summary, we are ready to capitalize on our leading Nordic position. The demand for our services centered around rail infrastructure and our strategy to execute projects in a sustainable way is driven by strong global mega trends that has stayed strong throughout 2 major crises. And we are coming out of these 2 years with stronger profitability, more financial flexibility, a record high order book and markets at record high levels. So with strengthened processes within tendering and project execution, we are ready to add on more growth and I believe NRC is better positioned ever to succeed. Now we will start the Q&A session. Lene?

Yes. Maybe we can start with the questions from the stream?

Yes.

Simen Mortensen. How and when will dividend policy be integrated in the financial targets for NRC?

I think we already answered that. We have -- we are hopeful or it's possible it might happen already based on our 2022 numbers and then it's down for payment in 2023. But this is not guaranteed. We are discussing, obviously, this with our Board. We need to deliver some thresholds and profits, and we have also some clauses in our debt structure. So we will see if it's possible to do this year.

Second question from Simen. How are the targets for the financial leverage?

Well, I think we mentioned also that. Our leverage target is to have it below 2.5x EBITDA. We think that's a fair level to have a leverage. We know that some of our competitors have a lower leverage, but I don't -- there are similarities here in our business model, but there are also some differences. We have a positive working capital or we have working capital, which are around 0, and that some of our peers have a very negative working capital. And as such, our balance sheet has the less risk than them because in the end, negative working capital is debt. And if you rewind your balance sheet, you need to pay that off. So we think that we should have also a debt structure, which is around -- or below 2.5, which is our target.

Okay. Let's open up for questions here. Any questions here? Please.

Yes. A follow-up question on that. Your net working capital on average has been declining. Do you see possibility for you to have negative working capital on average over a 12-month period as well from your comment?

Yes. I think it's possible, but we are hovering around 0. We are not really, I mean, 100% -- NOK 100-million-plus, NOK 80-million-minus. It is not really -- it's not significantly plus or significantly minus. We are hovering around 0. Is it possible to get continued down? Yes. But we are -- we will not get the same level as construction company with only private contracts because they have much more opportunities to manage their contracts to get better on their working capital. While we are fixed more because public contracts are more fixed, there's less thing we can do. But as I said, there are opportunities if you have the right culture and the right internal processes to continue to squeeze it down, but it's not going to be at similar levels as some of the other construction companies.

Coming to your margins. The guidance you're providing is, of course, on an overall company level. Could you elaborate a little on what that implies for project margins because you have a certain overhead you have to deduct? And could you also elaborate a bit on how is the margin picture between projects and maintenance contracts?

Yes. To take the last first. The projects in our construction contracts are higher than in the sort of long-term contract business. So profitability in construction is higher in average in our company. Then you asked about...

The deducting overhead, what's the kind of project margins we're talking about?

Yes. The increased profitability will come from increased project margins and our target is to somewhat reduce overhead as we get more operational leverage, taking on higher revenue without increasing overheads in the same pace. So partly by increasing the average project margin by the measures we are doing in the project execution process and partly operating leverage by increasing revenues without increasing fixed costs in the same pace.

What's your fixed cost overhead cost now?

That is not something we are communicating.

You showed a picture here, which kind of gave an indication on revenue growth in the second half if we look at the current quarter backlog. But can you share some thoughts on the first half of next year where you will have a very tough year-on-year comparison obviously?