Sectra AB (publ) (SECTB) Earnings Call Transcript & Summary

Welcome to Sectra Q2 report. [Operator Instructions] Today, I am pleased to present CEO, Torbjörn Kronander; and CFO, Mats Franzén. Please begin your meeting.

So hello, this is Torbjörn Kronander, and we have Mats Franzén on the line as well, and welcome to the Q2 report -- or 6-months report from Sectra. And I will tell you when to change slide, and I suggest we do that now. For you who do not know us before, we -- the way we create value for customers at Sectra is both by Imaging IT, by far our largest operation and also where all kind of the profit generation right now originates from or the substantial, at least. Imaging IT, where we provide management system images for health care, and that means that we take care of the images. And we started with radiology, but we do more ologies today. We can say this is image handling in parallel to the electronical medical record systems hospitals typically have. Then we have Business Innovation, which is more or less the greenhouse or a little smaller businesses. And we have -- these are -- as I said, they are greenhouse products. Some of them are over the history we have had. Some of them have been included into other business units. Like we moved digital pathology into Imaging IT about 5, 6 years back. We have sometimes shut down operations. We had an osteoporosis operation that we had there before. We have somewhat spun that off. We've spun off a whole division of mammography devices a couple of years back. So these are things that should -- something should happen with them. Another kind of trajectory that can go into is actually becoming a business unit like the big ones are, but all of these are open. It's things that we experiment with for the future. The 2 we have there right now is orthopedics, which is a fast-growing operation or faster-growing market, where orthopedics is replacing joints and repairing the human body in different ways. In order to plan that, they need a software and planning software, and we are very, very good at that, probably the best in the world. And the second one is medical education, where we facilitate training in medical doctors. We started up with replacing cadavers and dissections of real people, but we are doing that in virtual mode, and then you have a lot of advantages on that. Business Innovation has been hit by and benefited from COVID-19. Orthopedics has been hit because elective surgery has been more or less shut down in most of the world, while the education has increased because training medical students remote has become a very important task, and we are very good at that. And then finally, we have Secure Communications. That's the roots of Sectra from the beginning with data secure transmission. And it's -- that will do very high-level encryption system, especially mobile part for defense and national security level encryption, which has been impacted by COVID-19 in different ways as well. I'll come back to that later. Next slide, the value it creates for society. We do -- so medical imaging is an area where -- part of medical, and medical will have a demographic problem in too many old people or too many -- we have many old people in comparison to the working copays who's going to pay for it all. And that means productivity and quality needs to go up, and we have that as a business idea for the medical side of things. We are also working with increased cybersecurity. We have had tremendous attacks on society during the COVID-19 when everyone sits home. There's high risk of cyber threats and ransomware, et cetera. We are doing a very good job in protecting this both in Europe, Sweden and the Netherlands, which are our 3 main markets. And then we are -- also do a lot of research in -- within business unit innovation. We have -- in Business Innovation, we also have research division. And we have -- today, we also provide a lot of workplaces. We have more than 800 people in 14 countries currently. Next slide, Q2 highlights. The 6-month period, we have an increase in order bookings and profit. We are up more than double up in order bookings. Now a lot of that is from a very large order we got in Greater Manchester in the U.K. So as our -- some of our orders are very large, these order bookings goes up and down between quarters. Our profit per share went up as well. It's currently SEK 2.33, so it's up 51% compared to the previous year. But we do see deliveries limited by COVID-19 restrictions. And we also see that the first quarter was down, and then the lockdowns eased a little bit. We could deliver more in Q2, and then now the lockdown hitting us again. So we are affected a lot by COVID-19 in that we cannot deliver all things when there is a lockdown. Next slide. The financial targets for the group are fulfilled. Our equity-to-assets ratio, which is our top priority, we need to be stable and plus, where the company should be above 30%. We are at 55% despite actually having a redemption program for shares that we use instead of -- it's more or less equivalent to dividends that was paid out during the quarter. And then we have a profitability target of 15% or better. That has gone up to above 20%. That is not something we want to have above 20%. We have a huge opportunity of growth, and we want to still be profitable, but we want that to go down to around 15% and investing that extra money into future growth instead. Right now, a lot of those extra margins is because we cannot travel, and the large exhibitions are shut down or closed and turned into virtual ones. And then that reduction of cost in travel has increased in a larger profitability. So we're well above that as well. And then we have our main goal. When the first 2 are fulfilled, we want growth of profit in EBIT per share over 5 years to be above 50%. We are currently ways above that at 140.5%, so we are growing in a nice and steady pace. Next slide, seasonal effects. We want to point out that the variation between quarters has increased with COVID-19. We had larger variations before as well, but now we are affected. When countries locked down and open up, that has a huge impact for us. The variation will continue to be large. And as I've said, with COVID-19, it will increase even further until COVID-19 is behind us. Next slide, the COVID-19 impact on the health care side of the business. Exhibition and travels are canceled. That, of course, will have a negative impact on long-term sales. We meet a lot of our future customers on these large exhibitions. Now they are turned into virtual exhibitions, but that is not really the same thing. In the short term, it means less cost. Delays in deliveries due to restrictions for visits and financial strain on hospitals, we have the double effect of that. We are not allowed to go there with our installation personnel and some parts of security. Everything needs to be installed by couriers. We're not allowed to ship them. And that, of course, we can't deliver if couriers are not allowed to travel. And also, we see financial strain on hospitals. That affect us mainly on the -- in the U.S. market, where hospitals actually are now at least short of financial means. That will go over, but right now, that is the case. We also see that elective procedures are on hold. Elective procedures is the kind of medicine that is planned, like replacing your hip or something like that. That is now -- most of those hospitals are turned into COVID-19 hospitals, and they do much less elective procedures. The largest impact of that is in our small business unit of orthopedics, where the main business is elective procedures. We also see on the upside that telediagnosis has taken a leap. Also, radiologists and pathologists want to work from home. And if they're going to work from home in pathology, for instance, there's no other way than to digitize. You cannot ship a large wooden box with glass home to pathologists. And -- but they can sit with a monitor or computer at home doing telediagnosis. We see an increase in interest especially in pathology there. And we also see that post COVID-19, patient volumes may overwhelm hospitals because all these people who didn't get a hit now, they will still need it. And that will drive the demand for efficiency and improved IT solutions when this is over. Demand is coming after the COVID-19 is over. And that means you have to replace old IT systems that are not deemed to be effective. Next slide. On the cybersecurity market, we see that exhibitions and travels apps for medical. And of course, we also see our customers on exhibitions in that area. Delays in deliveries, as I said before, some of our products are so sensitive, they have to be delivered by courier. If the courier are not allowed to travel, we can't deliver it, and then we cannot invoice either. Upside, increased demand for cybersecurity products and mobile crypto solutions. There has been some very serious attacks or break-ins. For instance, there was, a couple of weeks ago, a break-in in one European country's internal defense videoconference where a hacker broke in. And luckily, he told everyone about it, but it was a really bad thing to happen. Of course, that increased demand for our approved products that are made for mobile applications. And then long and short-term increase in demand for secure mobile workplaces as a pull-up with that. Next slide, in Secure Communications, the Q2 highlights. Increased order bookings, yes, we did grow the order bookings there as well. Mobile VPN, we have a mobile workplace with a VPN which is quite different from the VPNs you all have in the laptops. It's a Level 4 VPN, which has a huge benefit if you do deliver things that have to move all the time. And we got a approval for national restricted level in Netherlands. And of course, that's very good because now we can use it for things that are classified in the Netherlands for communications. However, we see inadequate margins in Secure Communications, and we need to improve those. Next slide. So growth initiatives in Secure Communications is these mobile secure workplaces, where we are very, very good. We have good products. We have a good collaboration with especially Samsung for their Pass. And we have a lot of demand for that side. Then we have, of course, in critical infrastructure, the most sensitive part of all society today is, of course, the infrastructure, electricity, Internet, things like that, where an attacker of a country can attack that, no military invasion is then needed. And this has to be protected as everyone is connected to the Internet today. And we have a growing operation doing that. We also see first consultancy work done in critical infrastructure from other Scandinavian countries. So far, we've been mainly working in Sweden. And then we have for a secret level, the highest approval level you can get is high-speed encryption for networks. That is very high-speed encryption between, for instance, bases or offices with the government level where secret approval is needed. These we build entirely ourselves. It can be -- and it cannot be built on off-the-shelf components. Next slide, Business Innovation highlights. We have remote and interactive medical training in our medical education area. It was very interesting because, in January, we demonstrated with La Sapienza, one of Italy's most famous, renowned universities who have had all the first year medical students at home, and they ordered -- asked us if we can provide training at home or with computers or over iPads of different kinds, and we said we can. And they train all of those students remote using our equipment, and that became very widespread. And we did some webinars that were very well attended. And we have now follow-up orders on that. And one of them that is very interesting, one of the world's largest universities in -- which is in Mexico City, it's UNAM, and they have about 13,000 medical students, and 3,500 of them are now using our medical training software for training students remote. We have other orders as well coming in. So this is where we've sold our virtual dissection table before, but now we're selling content to this area as well. A very nice area. And then on the other side is that the table -- the virtual dissection table sales are down because of COVID-19 at the same time, so a very big impact on the type of business we do there. And then orthopedics, we see a strong negative impact from COVID-19 because you don't need to plan operations when you're not doing them. So there's a negative impact for orthopedics. Next slide, the trend in Business Innovation. We have new areas as well in orthopedics, which means that we're doing post operation for analysis, for even -- if prosthesis move, if a prosthesis move and there is motion between the human skeleton and the prosthesis, it should be replaced. But it's very, very difficult to see that. We have an image analysis-based system. We actually can measure that movement analysis. We can save a lot of operations from at all being done. And a revision, a second operation on the prosthesis implant is dangerous and very expensive. The first one is not very expensive. But the second one, we need to take out the old one and replace it, it's both high mortality and also very costly. And if we can reduce this, that's a huge medical advantage going forward. And we have a very good software doing that. We can use a variation of that software for measuring, also for clinical research for orthopedics companies. If they actually can use this or they can use it for evaluating if a prosthesis works a lot, and then you do it for -- directly after the implementation or operation. And then you measure a few months later, but the basic technology is the same, if it's stuck in or glued to the skeleton appropriately or does it move. Medical education, as I said, we are transitioning from device delivery to service. We can use the table, but you can also use normal computers for teaching students both remote and in the facility. And we are more selling subscriptions based on a very large database we have now for content of interesting pathology and cases. And in research, which is the third area, we are not doing any revenue, but we do have a large focus on AI for medical applications there. Next slide, the Q2 highlights in Imaging IT Solutions, which is our biggest area. We have large increased order bookings with huge regional contracts. As for Greater Manchester, which is about 3.2 million people served by an older medical imaging, will be done by -- handled by us in the future, a long time -- a long-range contract lasting many years forward. It would not be a onetime revenue increase but more an annual revenue per year it works or as long as we have it. And then we have an expanding customer base in the U.S. We have reported 2 new customers that are top rated. We are not allowed to tell who they are yet, but they are top-rated customers in the U.S. And we see also a very positive market for our new business model which is actually pay as a service for our systems instead of the licensing. This will affect cash flow very much because the cash will come per year. It would become recurring revenue instead. But all over, we believe a lot in this model. And we were very good in timing of it because COVID-19 has reduced liquidity with the customers. But of course, if you pay per usage, that will be possible to handle. So we have a large increase in interest for Sectra One and that type of operations. We're also delivering more and more over the cloud. And we got -- we just finished the install in one county in Sweden where everything is done over the cloud, a cloud that is hosted by ourselves. Next slide. The order from Great Manchester, that is one of the largest region-wide imaging initiatives in Europe. And there are a few more, and that is about the same time, but there are very few of them. It's operations that is covering 3.2 million people, at about 4 million exams per year. Next slide, growth initiatives in Imaging IT Solutions. We see new markets coming up. We have delivered pathology to Korea. We have orders from -- for digital pathology in Israel, for instance, which is the first we've done of pathology there and the first ever in Korea. We also see more enterprise imaging opportunity. We are the only vendor in the world right now who can deliver pathology, cardiology, radiology and other imaging ologies in the very same system. You don't have to buy 2. And of course, that's a huge efficiency increase in hospitals if you don't have many systems to work with but fewer. Consolidation of the IT systems you have is a strong trend all over the world. We are focusing in the U.S. That's the largest market in the world. We topped customer satisfaction with Best in KLAS, which is a research firm doing customer surveys in medical IT systems. And we have been top rank for 7 years in a row. We are a small market share still in the U.S., but we are growing based on our customer satisfaction. And of course, there's a large possibility to grow if you are small in a market as opposed to some other markets like Sweden, where we have something like 85%, 90% of the market and growth opportunity is limited, therefore. Next slide, I will leave the word to Mats.

Thank you, Torbjörn, and please go to the next slide. We will go through some of the generics in terms of the numbers and perhaps some highlighting comments on that. As you have seen and Torbjörn commented, the order intake for the first 6 months was strong. Again, there's big variations between the quarters. And as for the second quarter, we had about 77% compared with the last -- corresponding quarter last year. And I would like to emphasize that the order intake shouldn't be taken as a -- as an indication that this is fueled by COVID-19 because the sales cycles in terms of what materializes its order intake is way longer than that in most cases. And again, the order in Manchester obviously is significantly contributing to the nice numbers we see now. As for net sales nominally, it hasn't been all that strong compared with the order intake. Factoring in that we now, for the first time in quite some time, have a stronger Swedish krona means that the currency-neutral performance wasn't 6% for the 6-month period and close to 19% actually currency neutral for the second quarter. But then we should bear in mind that the second quarter last year was a fairly weak quarter in concern. And as you can see for the currency comparisons, the Swedish krona has grown stronger over the last couple of months in this financial year actually. Still on fairly high levels compared with a couple of years back, so it's anybody's guess where that's going. But obviously, a stronger Swedish krona is adverse -- in averse to our businesses since around 70% of our trading is in foreign currencies. Next slide, please. So where do we see traction in terms of sales? Well, basically, it's in the bigger markets obviously, the U.K., Sweden and, most of all, in the U.S. And it's primarily driven by deployments in the short run here because that doesn't mean, on the other hand, that it's single-digit deployment side. We do have had some good traction in terms of extension of service agreements and upgrades as well as adding new functionalities and ologies in the existing customer base. So it's a pretty different view on that. Rest of Europe has had a bit of a sluggish trend in the short run, but I wouldn't make too much of that. Next slide, please. So looking at the different segments, especially Imaging IT Solutions recuperated following a fairly sluggish first quarter. And that has helped us in getting back on track, if you will, although we weren't that worried about that. Each quarter has its different characteristics and volatility is high, as we have seen. We have also seen, and we come to that later on, in the fact that we have a good performance in the short run in terms of the cost. But we see that major deployments was Vanderbilt, Marshfield Clinics and Memorial Hospital in the U.S. And as for other parts, you can mention Region Halland in Sweden and continued rollout on deployments in New South Wales in Australia. Custom -- sorry, Secure Communication infrastructure have similar phase increase as Imaging IT and in terms of absolute Swedish krona brought to the table in growth. It adds, however, in this second quarter mainly in the form of commission developments being -- having a lower margin in the short term. And the idea is that the margins in that type of business will increase when it comes -- it goes into the phase of being deliverables following approval by regulating authorities. And as for the business innovation side, as Torbjörn has mentioned previously, we see -- first of all, it's a small unit, which makes volatility, everything has been the same, being bigger. And we have especially in the orthopedics side of business seen an adverse COVID effect. The picture in educational side is more heterogeneic because there are some markets that we have seen, as Torbjörn mentioned, increase in interest and demand growth in other parts of the business regionally, like in Asia and South America, where it has been an adverse pattern. So that's a bit of a -- we don't have telling that this part of the business is due to COVID right now. That's for sure. Okay. Let's go to the next slide, please. Then we come to the -- let's see. I have the same old slides. In terms of earnings, operating earnings, well, the strong trend in sales in the second quarter especially, combined with the fact that we have, I would say, COVID-related restrictions in how we -- how much we can travel in the short term materializes in very nice margins. But again, that, I would say, will not be sustainable in the long run. And of course, we are constantly monitoring how we can mitigate this in the long run because the mid- and longer-term perspective in terms of pipeline management and being able to get elective procedures up and running again, we -- no one really knows, I would say. It's a significant uncertainty in that sense. So -- but as you can see on this slide, it's primarily when it comes to profit generation, it's an Imaging IT Solutions-driven increase. Again, compared with last year, we had -- we didn't have a very good start of last year, which we communicated earlier on that, that was going to be the case. And the second part of last year was going to be the stronger one. Now as for the coming 6 months, the jury is still out obviously considering the fundamental uncertainties in that respect. So can we, please, go to the next slide, which is the last one I will be presenting to you. And that goes to cash flow. When you see the bars, once you see this slide, you will see that, again, we have significant shifts between quarters. We had good first 6 months this year compared with last year, although the second quarter was that strong. We had a strong finish of second quarter this year, which means a lot of the revenue is still slight up in receivables. I'm not too worried about this one. In the long run, I would say we have a strong underlying cash flow. And the ending balance of cash, it's some SEK 249 million, which is close to SEK 60 million more than last year. And that is following after the dividend of about SEK 173 million that have just been disbursed during the fall. So that was pretty much my side of the story. So Torbjörn, back to you.

All right. Thank you very much. I would like to point out, as a follow-up probably, the cash flow here will be impacted by Sectra One. It will be delayed. Not that it will not happen, but it will be delayed but will go over to paper usage instead of paper license. But long term, it will be better both for us and the customers. So next slide, Sectra's way forward. Our focus forward -- next slide again. Our focus forward is, again, high customer satisfaction. That is how we compete. And if we compete with giants, we need to have a special edge to it, and that comes in keeping customers happy. And you cannot have happy customers without happy employees. It doesn't work. So we need to be very careful and good offset, having good culture and good employee satisfaction. We want to grow, and we want to grow as much as we can, but we don't want to go below the 15% growing. But we do not want to take the margins up to 20%, 25% because that you can only do once, but growth you can continue with forever. So the intent is to continue growing, investing our profits above the 15% on growth. And we also want to, what we say, skate to where the puck is going to be. And that means we need to be doing things that's ahead of the market, and we've been good at that. We did digital pathology. We saw the need, we developed the da system before anyone else was on the market, and we now are benefiting from that early-mover advantage. Next slide, as I said, we've been the customers' top choice 7 years in a row in the U.S. And our target there is for U.S. large PACS. And we won to do -- these large PACS is kind of our core business. And then we also won the U.S. Small PACS, which is not our core, but still we want to keep the customers happy. And we won the Canada award this year, so we have the happiest customers in Canada as well. Next slide. And productivity of health care at core of society's needs, that is the situation now that will continue to be. We need to consolidate all medical imaging because customers want less IT systems in the hospitals. It might be 300 or 400 IT systems, and that's very difficult to maintain and connect to each other. We have all the medical imaging in one single system that interacts very closely with the EMR we have also for that. And in order to increase efficiency, we need to improve workflows. We've spent a lot of effort there and interaction and user interfaces. We also want to use AI to gain efficiencies. We don't believe in that AI with any overseeable future will replace radiologists and pathologists. It won't happen. But it can make radiologists and pathologists much more effective. And I can quote a customer of ours, Prof. Langlotz in Stanford University, who said that AI will not replace radiologists, but the radiologists who use AI will replace the radiologists who don't. And that kind of is a very good quote, and it shows exactly the thing we see going on in the market. Then we see the demand for secure mobile workplaces. People want to move around, and they still want to be as secure as if they were on their home network. And we are very good at that. We have a thing that it's very good on roaming and moving around. We see the high-speed communication channels. A few years back, the need between different departments of the government, for instance, was perhaps a couple of tens of megabits per second. But we now have needs of tens of gigabits per second, which is quite an increase in demand. And we are good at that and especially at the top security levels like secret and top secret levels. We're also trying out a few in completely new areas. Implant movement analysis for orthopedics is one. And digitize pathology imaging, it's now maturing. Now we'd like to add remote teaching students there as well. Next slide. We were, during the last quarter, recognized with the top innovator award 2020 by a Swiss innovation investment firm, ALPORA, who also run funds, who only invest in the innovators' companies in Europe. And we were deemed to be one of the 10% most innovative companies in Europe, and that, of course, is a very good pat on the back for us going forward. Next slide. We also see increasing recurring revenue. We -- pay per usage is taking over all the software world, software service. It improves value for both customers and vendors. We -- most likely, all of you have changed over to Microsoft 365 instead of buying Microsoft application to the box in a shop, and so the hospitals want to have it. And our new business model Sectra One we introduced in May in the U.S. will play a very important role in Sectra's future when we actually can take customers on in one ology, and then we simply can add the other ologies after while instead of selling a system for older radiology, for instance. The transition to this increasing recurring revenue model will be over several years, but it's accelerated surprisingly much by COVID-19. Next slide, how we handle the pandemic. First, we make sure our customers are okay, so they can do good to society when society needs it the most. Critical infrastructure, cyber threat is increasing. It seems like cyber criminals are now utilizing that everyone sits remote, and they're trying to get anywhere. We've seen some remarkable attacks over the last year. And that, of course, increases interest in cybersecurity. And we need to make customers happy so they can trust us and work hard with them so they can continue to be safe. And also doing a very good job in medical, so the medical community can actually treat patients as well as treating COVID-19 people. Health and well-being of our employees, of course, that's very important. We follow the laws and regulations in various companies. As these vary a lot with per market, we don't have any main company approach. We just want our employees to be healthy, so they can do a good job for our customers. And then our financial stability is important. We want that. It's important for our customers. They can trust that we'll be around for a long time coming because they trust us in providing these long contracts with us. Next slide. As our philosophy for shareholders, we have a strong idea that shareholders will be happy if we have happy customers, happy employees, a good position in growing markets, perseverance and reasonable cost control. Now you need to do it in this order. You can't start with the shareholders. The shareholders' benefit will be a consequence of what the other points I've listed up here. And that's important and that we have proved, I think, over the last year that this works. Next slide, our upcoming financial reports. March 12, 2021, we have a 9-month report and presentation. And the June 2 is a year-end report and presentation. And then somewhere in September, we will have an AGM, but it's not exactly decided what date yet. Next slide, we again urge you to give us feedback on these presentations. We are very grateful if you can provide that, so we can improve these presentations in the future. Questions, please? You can either send the questions by e-mail or you can actually ask us online here.

[Operator Instructions] Our first question comes from the line of Kristofer Liljeberg from Carnegie.

First one, I appreciate you want to focus on growing the business, of course. But at the same time, wouldn't you say that this quarter is an indication of the potential to maybe have a sustainable lower cost from working more efficient with remote installations, et cetera? That's the first question. Second, the comment you made about lockdowns here and the second wave of COVID in both U.S. and Europe, how do you see access to customers now relative to the first quarter when it was obviously real above? Second (sic) [ third ] question, regarding the cash flow, you mentioned that the weakness here in the second quarter was buildup of receivables due to a large part of sales late in the quarter. But have you also started to see the impact from the new revenue model in medical imaging?

Okay. So as for margins, the main reason why the margins went up is actually reduced cost for travel and exhibitions, as I've said. And now we are learning also to be more effective. And especially the market is learning that you actually can go live without a lot of people, Sectra people on site. So we think they will be somewhere in between. It will not go back to the levels we had, but it will not say in this cost-saving levels because these exhibitions are very important for us. Long term, we need them, and we need to go there. And if we can see customers, it will be very hard selling in the future. So a combination of these 2. We intend to bring the market down and use the extra money to growing more and faster because we don't lack these. But right now, that is what we ended up with the reduced cost.

So could I ask you then? So let's say there is a structural difference here that is possible to run operations as good with lower cost than what we thought 9 months ago. Would you use all of that to invest in growth? Is that what you're saying?

We -- long term, we don't want to use that right now because we don't know what the lasting effect will be. But we must also understand that the hospital especially are very pressed on money right now. Some hospitals, very large, very prominent hospitals lost 80% of the revenue for 6 months, 80% of the revenue, not 80% of profit. Now that has put a tremendous stress on the financials of these hospitals. And that might result in that we see lower prices because they -- we don't know what the impact on pricing on the market will be. So it's too many unknowns to really give a good reply. So your second question was access to customers that went down in the first lockdown wave. We see that effect now as well in the new lockdowns but perhaps not as pronounced. We don't know how much if we lock down, but we do see that we are again not allowed to come to hospitals in many, many countries. Again, being completely honest, we don't know yet how much that will impact us for Q3 and Q4, for instance. So it's unusually uncertain situation. We have a lot of orders. We have a huge order intake. How much we can recognize of that and when is unusually unclear for us. And the third one was receivables and cash flow -- cash flow and if Sectra One is already making an impact. It's not. We have received the first orders for it, but it has not been installed and taken into usage, so we haven't seen that effect yet. But it will be seen over the next few years to come.

Could I ask you there about Sectra One? For example, the 2 unnamed U.S. hospitals, are that in Sectra One or more traditional? And how are you going to book orders for -- are you going to book orders as you have always done?

Yes. There is a lot of -- perhaps, Mats, you can take that question.

Yes. Well, I would say that the discussions are ongoing. My experience in many of these cases is that we may go with a hypothesis for a contract structure for some time. And that doesn't really settle down until it's settled, so I wouldn't put my neck on this and say this will be Sectra One, both of them, yet because I think it's -- the jury is still out on that one. As for cash flow too, I agree with -- I agree, I confirm what you said, Torbjörn, that we haven't seen any significant impact from Sectra One contracts since they are still to be emphasized. We would have had a somewhat more like hiking cash flow in Australia, like that would have been a onetime deployment. That has been over time. But since that has been only several quarters for quite some time now, it hasn't really impacted the bigger picture, I would say.

I can add that Greater Manchester will, of course, be an investment in the beginning before we begin to take it into -- take it live because that's in between, where they pay a certain amount per year for many years forward. And -- but we cannot recognize that until we take the first ones live.

Okay. If you take the launch contract in New South Wales in Australia, that's now starting to go live. If I remember correctly, I've had some revenues already before in that contract. Is it possible to quantify the proportion of revenues you have had so far relative to the full potential when it will be up and running?