StrongPoint ASA (STRO) Earnings Call Transcript & Summary

Okay. Welcome, everybody, to this Strategy Update session by StrongPoint. This has become an annual event. I'm very pleased that -- to see you all, or many of you live here in Oslo. And then we have a number of you joining also on webcast. In today's session, you'll be able to meet with some of my colleagues. Marius, you hopefully already know, our CFO, but you'll also be introduced to Magnus, our SVP and Managing Director for Norway and Sweden. Alex, our MD in the U.K. and Ireland, and last but not least, Lorena, our MD in Spain. So they will all have each of their sessions today. It's a rich agenda. I'll do a bit of introduction, talk about the ambitions we set forth and why we're not achieving those ambitions. We'll talk more about specifically what's happening in each of the major markets we're in. We'll have Marius to touch base on finances and then I will wrap things up and open up for Q&A. The questions, you can, of course, ask in-person at the end of the presentation, but also post online where Dominic here is going through those questions. So let's first start off with what is StrongPoint. Well, so our purpose is getting retail technology in every shopping experience for smarter and better life. And that is whether it's online and off-line. And when you say a purpose like that, it might sound grandiose, and to make it a bit more tangible, we also want to talk a little bit more about the solutions. I will get to that in a second. StrongPoint at a glance. We're not a new kid on the block anymore. Our history goes close to 40 years back in time. We are now in 9 countries. We call it 9 core countries, including Norway, Sweden, the Baltics, Finland, Spain and also now U.K. and Ireland. We have about 500 people employed at StrongPoint, and we've been listed on the stock exchange now for almost 2 decades. So we're not a new kid on the block, but we're constantly working to rejuvenate ourselves and we'll talk more about that today. One of the things with StrongPoint is that, we have a rather wide and broad portfolio of solutions. So rather than having 1 product that you try to conquer the world with, we have several products that we really want to work with our customers on in the 9 core countries we are. And in addition to that, we have some products that we are very proud of that we believe there is additional potential with partners outside these 9 countries. I will go a little bit through some of the solutions to help any new listeners understand what this StrongPoint really doing. Start on the very top left corner here, we have Vensafe. Vensafe is a solution that's, in a way, institutionalized in Norway. And typically, in Norway, if you buy any kind of tobacco product, it's Vensafe that dispenses those products. We've also seen that coming to life in Sweden and the Baltics. And we have additional potential in both these markets, but the really, really interesting thing is, what's happening now in the U.K., not just with tobacco products, but theft prevention in general. It's a big, big deal. And Vensafe is a very good solution to prevent that. We are also having electronic shelf label in our portfolio. I think it's fair to say that StrongPoint has been instrumental over the last 10 to 15 years in getting electronic shelf labels into Norwegian society. We kind of in Norway take that for granted that you have electronic shelf labels in grocery stores, certainly, but also other retail stores. That is absolutely not the case in many other geographies also where we are present. And we have a strong and good partnership with Pricer in this regard. A third point that we're very proud of, that also personally annoys me is the fact that we have, what I consider to be one of the absolutely best self-checkout solutions, developed out of the Baltics, which means it's highly, highly cost competitive, but also takes into account all kinds of IDs you could have about how to cheat a self-checkout. I'm sure Norwegian and Swedish, and I know certainly British newspaper reading individuals would have read that, to some extent, grocery retailers are considering to close down self-checkouts because of that. Well, our solution has the ability to use artificial intelligence and use, what you call, item detection to observe what are the items you're actually buying. And a very banal example I will use is bananas. So when you're in Norway buy Chiquita bananas and you start punching in on your self-checkout that you have bananas, you get the option of the expensive Chiquita bananas versus the low price. And you see surprisingly many people, also in Norway, start choosing the cheap one. That completely destroys the shopping basket for the retailer. We have that solution, and we cannot wait to get that solution into Norway and Sweden as we have in the Baltics. Cash management is a long-standing product we have in our home markets. And although cash usage in Norway and Sweden is very low. There's still significant volume going through the CashGuards that you would see in grocery stores in Norway and Sweden. You see that also in Spain. But as we will talk more about, we've seen the need to adapt or create a new kind of cash management solution, specifically for grocers in Spain. I will talk a lot more about that today. We have other solutions that currently are only present in Sweden, ShopFlow Logistics, an inventory control and order management solution that we have with many, both retailers and grocery retailers. And again, we cannot wait to get that out in the market. And further out, I should say in time, we also have positions to introduce robots in store, both sort of -- I'm sorry, Android looking robots with the cooperation we have with 1X, where StrongPoint also holds a position, but also more purpose-built robots for transporting shelves or picking shelves back on to individuals. So a rich portfolio to help our grocery retailers and retailers in general, succeed in store operations. And in addition, we have an e-commerce portfolio that we are also extremely proud of. Earlier this quarter, we announced the win of Sainsbury's, the by far biggest grocery retailer in terms of e-commerce picking in-store. So Sainsbury uses e-commerce pick solution in-store to fulfill orders. And we've been giving the honor and the trust to deliver that solution. We've gone from sort of believing and proclaiming that we have the best solution in the market stemming out of Sweden with an acquisition we did back in 2018 that we spent considerable money investing in that platform to make it cloud-based amongst other things. And now is the final sort of testimony with the win of Sainsbury. So we'll also talk more about that today. Our solution can also be used in dark stores, and we also have a very proud partnership in AutoStore, where we were the first selected grocery-specific distributor. We have now 2 sites operational. The last one being operational and opening officially very soon. It's also a little bit of a world news. That is the 3 temperature zoned AutoStore, with the ambient, chilled and also frozen capabilities that allows for any kind of grocery retailer or wholesaler to apply AutoStore in their operations. We have a number of different also last-mile opportunity. So we cover the fulfillment, the picking solutions through the 3 mentioned solutions, but we also have a number of last-mile solutions. Firstly is a solution that has been in very big demand over many years in Sweden, which is lockers, grocery lockers. We have both indoor, outdoor, stationary and mobile lockers. That allows retailers to do the picking of orders and then put them in lockers for the customer to pick them up when it's convenient for them. That is convenient for customers, but it's also very cost-efficient for the retailer. The last-mile delivery to home is typically a very, very big portion of the total cost of e-commerce fulfillment, allowing for the delivery of those groceries in grocery lockers next to store is cost-efficient. And it also makes the incumbent standout versus the pure players. And we've seen to date the -- all the grocery retailers in Sweden being very successful in achieving up to 50% penetration in this market, meaning 50% of all grocery purchases are actually picked up in-store. We have a last-mile home delivery solution as well in cooperation with a Swedish -- another Swedish company called Gordon Delivery. And, of course, we have a more simple solution to deliver groceries if you don't have the volumes to make up for an investment in lockers, for instance. We also have drive-thru solutions that automatically identifies the license plate that you have, making the shopping journey for the customers even more smooth and leveraging the stores as you would do as an incumbent. And lastly now, we are also very proud of having a partnership with Blue Yonder, that's the WMS solution we're using, along with AutoStore to create the StrongPoint e-commerce fulfilment solution. So as you can see, a very broad portfolio of solutions we have, and as we will talk about later today, there is a purpose and meaning behind that broad portfolio. And in essence, that there's a lot more easier for us to sell additional solutions in addition to 1 solution plus another adding on additional incremental value for customers. That is very exciting. So that's the StrongPoint solutions in brief. Now, let's move on to what are then the customers that StrongPoint has that will typically have these solutions? And as I said, we are in 9 countries. We typically have our stronghold in Norway, in Sweden and the 3 Baltic countries. These are what I will be referring to as the traditional StrongPoint markets. I mean, in these markets, we have 100% penetration. We serve them all, NorgesGruppen, REMA 1000, ICA, Axfood, IKI, RIMI, et cetera. We serve all of the grocery retailers with 1 or more solutions. We have increased our geographic scope to Spain. That was done a few years ago with CashGuard. And in the last few years, we also increased the geographic footprint to include U.K. and Ireland through an acquisition of a company called Air Link Group, now part of StrongPoint ALS, and also into Finland, which, of course, resembles a lot of the Scandinavian markets. But all in all, a very good customer base in these 9 countries, where we do, not only do the sale of products, but we also do the installation, the service and support. That is important for us because we're not just selling a hardware product. We are with the customer throughout the journey and where the installation service and support agreements and setups we have is a vital part of ensuring a good profitability over time. So that's short about StrongPoint in case you were new to StrongPoint. Certainly, I know the faces in this room are not new to StrongPoint, but hopefully, it was something new there as well. Now, let's talk about financials. And how is our updated financials versus the ambitions that we set forth earlier? In 2020, some 3 weeks before the pandemic hit, we set forth a strategy. That strategy included, amongst others, to be more grocery retail-oriented, not retail in general, and certainly, not maturing the other business units that we back then had. We also then announced on financial ambitions, ambitions for 2025. And we said that those ambitions would be twofold. One was a revenue target of NOK 2.5 billion, and the other was a profitability measure in terms of EBITDA of 13% to 15%. Now, I'm not going to talk about all that happened between 2020 and now with pandemic and war, but certainly, that has impacted us, some positive, some negative. But when we now do up status of where we are and we look at last year's results, we were far away. We had a revenue of NOK 1.35-ish billion and a 0% EBITDA. EBITDA basically wiped out for the latter half of the year. And so, for us, we said after Q4 results that it was not going to be achievable to get to the financial ambitions that we set forth in 2020 for 2025. And although we don't guide, of course, we would like to help investors understand where are we going to be going, what sort of estimates or even guidance towards 2025 are we going to have? And that is in the area of NOK 1.5 billion turnover and EBITDA of 4% to 6%. Of course, this is far from the original ambitions we set forth. There's a big range as well in these ambitions and the range should be seen as a reflection of the uncertainties that we experience in the market today. So I believe listeners will probably ask themselves at least 2 questions. One is sort of why or how is it possible to miss so much on an ambition, not necessarily a target, but certainly an ambition? And number 2, how or why did we wait so long to announce that we would not be achieving these ambitions? Why do we wait until after Q4 to announce that we will not be achieving these ambitions? And I'll try to explain how we've been thinking about that. If I start with the second one, why do we wait until Q4? We certainly had quarters in the beginning of the year, Q1, Q2, achieving both more than 40% growth and more than 20% growth in the market. Q2 for us was a soft quarter, and that's what we also announced to the market and Q3 was rather poor. Our assessment when we were going out of Q3 was that we had a pipeline that was significantly better than what was materializing in Q4. Actually, when we -- and when I say we, management and Board was looking at the pipeline and forecast for the fourth quarter, that was actually more than NOK 100 million higher in terms of revenue. So when we look at after Q3 results, we believe that the revenue would be more than NOK 100 million more in Q4 than it was actually. And despite having taken cost measures that we announced immediately after Q3 of NOK 25 million gross, NOK 20 million net with a full effect from Q1. The revenue decline with the gross margins that we had basically took down the entire EBITDA more than NOK 40 million. We were not able to adjust quick enough or it's actually quite difficult to adjust quick enough in that short time of space. And it also reflects the uncertainties that we've seen in the market with the grocery retailers. That's why we wait this long. Then, why on earth is it possible or how on earth is it possible to miss that much on an ambition that we set forth? I think if you distill it down, there's really 3 effects that we have seen in the market. And I'll go through each of these and give some more flavor to it. The first is, it's been a difficult -- it was a difficult year in 2023, and it is a difficult year for '24 in general for grocery retailers, which means that makes life a little bit more challenging for also StrongPoint. A bit small printer, but if you read on the left-hand side, this is a survey that McKinsey has been doing with CEOs across grocery retailers. And what you see here is that, on top of this list by far, is the margin and cost pressure that they're experiencing. The interest rate increase has certainly hit consumers of grocers. Inflation hasn't helped. There's a lot more price consciousness. There's also trading down, which is the second point there, trading down consumers. And what that means is that, rather than going to the expensive supermarket or niche retailer, you'd rather go to the discounters. And you've seen across Europe and in the markets we are, that discounters, soft and hard, are achieving better than -- better performance than a market overall. What that does to the market is that, a lot of the -- whereas the market in general is relatively resilient. I mean, it's not like any of our customers have any big risk of default, not at all. But the effect is that, once you see discounters growing their market share, you see supermarkets starting to invest more in price rather than other measures. So you see cost measures, and you see investments in price, meaning keeping prices down rather than necessarily investing in new technology. And that's what we've seen. There has been a push in time on the investments that the investors have. Investors that meaning grocery retailers in this aspect. Certainly, if you look further down on the list there, you will be able to see that what is on top 3 of CEO's mind is still IT modernization and digitalization. And we believe that, that is absolutely going to be a factor playing in the medium term. But right now, the margin squeeze and the down trading is impacting our grocery customers and as such StrongPoint and investments that grocers are doing. Then you might take a step back and just reflect didn't StrongPoint see this? Didn't StrongPoint see the growth and advent of hard discounters and soft discounters? And certainly, we have. But also for us, it's been surprising to see the level of price pressure in the market that you've had over the last 1-plus year being larger than anticipated. Public scrutiny, not only in Norway, has been the case all across Europe with inflation driving food prices and a governmental cry for retailers to keep down prices that has led to additional pressure on this. So that's been the first challenge that we openly say that this has hit us for the last 1 year, and likely to continue in '24. The second thing is a bit more StrongPoint-specific in the sense that 50% of the revenue we have comes from Norway and Sweden, but a really strong hold traditional StrongPoint markets. Certainly, if you're a Norwegian or a Swedish, you would have experienced your traveling abroad to be a lot more expensive. The foreign exchange rate of the NOK and SEK versus pound and euro and dollar has been going in, what you call, the wrong direction. Our value of NOK and SEK have depreciated. What does that mean for our clients? Well, it means that over time, and this has been going on for 2 years or so, the products and solutions that we offer that still, to a large extent, have hardware components in them are purchased in dollar or euros. But all of a sudden means that these investments are 15%, 20% more expensive than it would normally have been some 2 years ago. Obviously, that's not helping on a business case where what you're doing is investing in solutions to make savings. And it's, of course, also not helping that the interest rates have increased, making those investments even more difficult. But for Norway and Sweden, the depreciation we've seen over the last 2 years have certainly not helped in that respect. And then the last point, which I will touch upon is the U.K. So first of all, I must say, now it's 1.5 years ago, we did the acquisition of ALS or Air Link Group. Most of the business in the U.K., some business in Ireland as well, very successful shop fitting business -- engineering business. This is not product sale or solution sale whatsoever. We're very conscious of this, that this has been engineering services. But engineering services and shop fitting services to some of the biggest grocery retailers in the U.K. with the names of Tesco's, Sainsbury's and Asda on the product -- I'm sorry, on the customer list. And following COVID, we had a fantastic journey with ALS. We described it internally as a catch-up effect where a lot of the shop fitting that was supposed to happen during COVID and for obvious reasons, didn't happen, happened immediately after we had done the acquisition. We had a fantastic 9 months, if not a year of business being done with our big clients. And also, although it's very difficult to put a number on it, I feel very certain that if we had not also been for the fact that we are present in the U.K. and Irish market with a big organization, we would have probably struggled to win the likes of Sainsbury. So, obviously, we need a product. We need the people to sell it and customers to showcase, but having that presence in the U.K. has also been very important. So all in all, we believe this is a very, very good transaction that we did. But that said, with the very large growth of shop fitting work to be done, it's also fair to say that some of that had temporarily halted the quality of work. If you don't have quality of work in shop fitting, you don't get the next award given to you. And whilst this is happening, we also recognize the need for product and solution sales expertise and experience. There was the new -- we had a fantastic shopping business, now we wanted to put sales competence on top of that. And so, now we've -- as you will meet later today, have Alex, and he's starting to build a team in the U.K. around this. So the effect of having Alex in a new team in is also that part of the old team had to let -- we had to let go and the short-term impact we're seeing on the shop fitting business, we see now. And I pressure on the sort of short-term impact of exactly that. But in total, how did we miss so bad on the ambitions that we set forth? Well, certainly, the ambitions were audacious. They were big and [ hairy ], as some may say. I think has been driving us in the right direction. We've been doing what is not so evident maybe from this is sort of big investments that have -- that we have expensed a lot of that, both to win the Sainsbury's and the likes, and not least as we just announced, to develop the new revolutionary cash management solution that we're getting into Spain right now. We've been asking ourselves have we -- is there anything we could have done differently, reflecting on how could we miss on this? We believe that these are as open and possible solutions, or sorry, explanations to what has happened that we can, and we try to be as open to the market as possible. Now, does that make us any more change the view on the future? Well, longer-term, we're certainly very positive about the solutions that StrongPoint offer. And I personally think it's a -- we're at a shadow of the doubt that you would be getting more and more technology solutions into stores to make the stores more efficient. And the rise of e-commerce is going to continue, although we could always discuss at what rate, but I find it difficult to believe that we will be buying less groceries online than more groceries online. And we are very, very well positioned for that. But whereas these are the challenges, I also want to talk a little bit about what are the measures, the actions we're taking now in the market to cushion the impact this is having short-term for us. Firstly, we announced, following the poor Q3 results, we announced a NOK 25 million gross, NOK 20 million net cost savings. When I say gross and net, 5 different -- NOK 5 million difference is because we are actually investing in the markets of U.K. and Spain, whereas we're taking down the cost levels in the traditional StrongPoint markets. We are now based on the market that we're observing, taking an additional NOK 20 million out of our cost base as well. And with that, we're also undergoing a restructuring of the Norwegian and Swedish market specifically. Rather than having 2 different Managing Directors, we will be having 1, Magnus Rosen, who will you be meeting in a second. Magnus has been serving as our MD for Sweden for more than 1 year. And he's also been given the responsibility of Norway in addition to that. And the reason for that is, obviously, whereas there are big differences between markets, there are certainly synergies, in particular, on the back-end thing that we want to explore further. For the U.K. and Spain, let me start by U.K. I mean, we have now, Alex, who is new in the quarter. Alex will be given the opportunity to introduce himself, but he has a very, very impressive background from both Ocado, Aldi, ASDA and also Takeoff Technologies that operate in the micro-fulfillment space. So I'm very thrilled to have Alex on board to capitalize on the opportunities that we see in the U.K. market. We are also obviously building teams around Alex to serve the customers that we have and are getting more efficiently with product expertise and sales expertise. And we also, yesterday, announced that we are setting up an advisory board with Neil McCourt, a former Managing Director of Tesco's and a Vice President at Amazon to work alongside us. Neil is a fantastic resource, I believe. And I'm very proud that we are able to attract that kind of competence to the company to help us capitalize on our, firstly, the Sainsbury deal that's attracting a lot of attention, but also on the very exciting cash management project we have in Spain, where Neil has been working as Vice President of Amazon, but predominantly in the U.K. We're also, as part of the cost reduction and reorganization, making sure that the product expertise and solution expertise and experience that we have in Norway, in Sweden and in the Baltics is that it's possible to actually use this in the other emerging and bigger countries like U.K. and Spain. We can be really proud to say that we have expertise in how to set up stores with electronic shelf labels make that work in-store, not only to change prices, but also to do integration with e-commerce operations. And bringing that expertise from the likes of Sweden into the U.K. is exactly what brings that credibility to grocery retailers that are looking for our solutions. So lots of actions taken both in the traditional markets, as well as the emerging markets, U.K. and Spain. There's also a, call it, longer-term action we're taking. And that is sort of specifically on recurring revenue. Everybody, of course, wants recurring revenue. We have, today, about 1/4 of the revenue being recurring, and that recurring revenue is a combination of license agreements, service and support agreements that's kind of rolling on either pure digital solutions sold or on physical hardware products that have been sold in the market. That is obviously important for us in the long run, and we're looking to grow that. As of this quarter, we also grew that recurring revenue by 7% on a 12-month rolling basis. So that's important for us. But when you have a portion of the business being recurring, you have a big portion not being recurring. I still want to separate that between complete new sales, like virtually all sales in the U.K. are now with what they call reoccurring. Reoccurring business, meaning we have installed a Vensafe or a self-checkout, and that's kind of with wear and tear after 5 to 7 years that's sort of going out in time. You need to replace that. Same with electronic shelf labels. The infrastructure is in place pretty much everywhere in Norway, but you're not going to go back to paper tax. You're going to continue with the electronic shelf labels and such you need to refill on the tags when the battery lifetime is succeeded. And so, there's a significant portion of the business that we have that is reoccurring. I cannot exactly label which is reoccurring versus new sales, but that's important to have as an aspect as well in this. And our ambition, of course, is to grow our reoccurring business and recurring business, not at least. Okay. I hope that gives some level of understanding and confidence where we're coming from, trying to be as open as possible about the reasons why we are so far off from the originally set ambitions and the considerations we've been doing in the last few quarters. Now, I want to talk about some big wins from big investments. We have, of the last 4-ish years, been doing quite significant investments. Most of those have been taken straight over the P&L. So as I said, right, we have a -- we acquired a company called Cub in Sweden that we realized was a fantastic picking solution, tailor-made for grocery retailers in Sweden. We have spent a considerable amount of investments into making that solution applicable for other countries, making that into a cloud-based solution, adding on new functionality that you need to see in other markets. And now we're starting to see the fruits from that those investments bearing -- well, those investments bearing fruits. And in beginning of Q1, we announced the win of Sainsbury. I'll talk more about that. What we've also done over the last 3 years, but not really been able to communicate to the market has been an investment in a new cash management solution, specifically for Spain. Last year in the Strategy Update session, we talked about this investment because it's big, it's sizable, and it's going to last for several years. Now, yesterday, I was very pleased to be able to announce that this investment has been done, not for just anybody, but for Mercadona. And again, I have sympathy for those of you that does not know Mercadona in very much detail, but this really is the Tesco's of Spain. 26% market share and growing as a soft discounter that looks like a premium store. So those have been 2 investments that we have been in parts running off the P&L in parts been putting into the balance sheet now, in particular, the latter piece. And I want to spend a little bit of time just, first of all, contextualizing these 2 clients and also explaining why we believe these are so important. And in my own words, I believe the Sainsbury deal, when we announced that was the biggest and most important deal in a StrongPoint history, and now just rivaled by the project we have ongoing with Mercadona. But to contextualize this, let me put it into a context that many Norwegians know NorgesGruppen, by far the biggest grocery retailer in Norway, NOK 110 billion every year in annual turnover. And by the way, this is also including ASKO, their wholesale business. It's also including the kiosk market and convenience chains that they have. But that's NOK 110 billion, by far the biggest grocery in Norway. Now, Sainsbury's and Mercadona are about the same size, more than NOK 400 billion revenue. Each of them is like the entire Norwegian market and then add on 50% to get to that. So they are just massive clients, massive potential, obviously, but it also puts a lot of expectations and strain on StrongPoint. The grocery retailers in Norway and Sweden are already tough, but I can promise you that the level of security and SLAs are even stronger with these mammoths in the grocery industry. So in addition to these companies being so big, why are they then -- why are we spending so much time talking about them? Well, I'll give you 3 reasons. The first is the opportunities in themselves are very large. I'm not allowed to put out any specific numbers, but let me help you. Sainsbury's have 14% of all its revenue in e-commerce. That's about NOK 60 billion in e-commerce only. Sure. Parts of that is apparel, but most of this is in e-grocery. And they're doing their picking in stores. There's no leakage in a way to dark stores or to automated fulfillment. They're doing the picking in store and they will be using StrongPoint's Order Picking solution. We're starting the rollout now in the summer. But with the share magnitude both in terms of volume and stores, you would understand that the rollout needs to continue all the way into 2025 as well where the additional -- most of the stores will be coming online. And the price model for StrongPoint is that, we're getting an order-based fee, which means that for every order placed and fulfilled, StrongPoint is getting its revenue. So we will be growing with Sainsbury. So very nice recurring revenue. Then you have Mercadona. Although this is maybe difficult to realize in the Norwegian context, but actually 50% of all transactions in grocery retailers in Spain and Mercadona is no exception, is done with cash, 50% of all transactions. In terms of revenue or turnover, about that 1/3, which means that there is a NOK 140-ish billion going through the counters in terms of cash at Mercadona every year. That's close to 10% of the entire cash in the Spanish market. It's massive, and it's physical and needs to be moved. Whereas we Norwegians tend to think, well, shouldn't cards take over any time soon. I mean, that's not likely to happen very quickly. And there are a number of reasons for that, but Norway and Sweden are the, in a way, outliers in this aspect, although the cash levels were even higher before COVID, it's still withstanding at a very, very impressive rate switches in this context, good for StrongPoint. So that's number one. These opportunities are large in themselves, very large. The second point is upselling. I talked about the broad portfolio of StrongPoint that we have. And sure, we've had internal discussions about do we have too broad portfolio, should we slim it? And that's constantly a discussion, an ongoing battle that we're having. But what you see on the right-hand side of this picture is the number of solutions that StrongPoint offers that we have with our top 10 grocery retailers in the traditional markets, Norway, Sweden and the Baltics. And you see that many of our customers have a lot more than just 1 or 2 solutions. Actually, the average number of solutions, our top 10 customers in the grocery retail space is 4.7. Why is that? I'm certainly has something to do, unfortunately, still with trust. StrongPoint is a trusted adviser. They know that, have you guys delivered Vensafe? And not only delivered it, but serviced it, maintained it, supported that. The ability to get in a new solution like CashGuard or electronic shelf label, that barrier is lower. But there's also another element, which is that, the solutions add more effects to them when you combine them. If you talk about the Order Picking solution we have with Sainsbury's, it's very likely that you could start embarking on a discussion about, well, wouldn't electronic shelf labels make sense using pick-by-light functionality to speed up the picking even more so. So when we now have landed a deal with Sainsbury and we put in 2 solutions here because we're already serving Sainsbury's with shop fitting, gaining the -- getting the credibility there. The picking solution is the second solution on the way to the 4.7 and beyond hopefully. And similarly, with Mercadona, although it's not yet a signed deal, the installation of the first cash management solution, a new revolutionary cash management solution that we'll talk more about is the first, hopefully, on the way to more, hopefully on the way to 4.7 and beyond. So that's the second reason. The upselling opportunities for us when we showcase the trust that you could have in StrongPoint, like we have in the traditional markets. And that should be said right away, we have not lost a single customer in the traditional markets. That's never happened. We have not lost a single customer, where we have 100% penetration. And the last point about these 2 major projects is just the sheer size of these in their home turf context. As I said, Sainsbury's is the second largest grocery retailer in the U.K. 14% market share, sure, Tesco is bigger, but 14% market share and that considerably they're not just revenue, but also esteem and consideration amongst grocery retailers. And Mercadona, at least if you work in the grocery retail space, that's a -- I'm sorry, a company that is really being looked up to. People look to Mercadona, people look to Sainsbury's, in particular, in their home markets, but also beyond. And contrary, I should say, to the Norwegian and Swedish and Finnish market, in particular, where you have 2 or 3 dominant players, the list of serviceable customers that we have on the back of these 2 in the U.K. and Spain is a little longer. We're currently talking about how we serve [ Alimerka ] and others. They are far down the list there, but still big enough to be serviceable. And that same applies for the U.K. There's a lot longer list of serviceable customers for StrongPoint. So it's taken a strain on the investments that we're doing on the financials right here and now, but we feel very certain about these investments making sense in the longer term. Before starting to dive a bit deeper into the specific countries that we operate in, I want to round off with this 1 page. The market opportunities we have in the 9 markets where we are present. So take the traditional markets, certainly, we are very, very well penetrated. It's only Tesco that we doesn't have on the list in Finland of grocery retailers to be served. And whereas you might think that, well, every grocery retailer in Norway have Vensafe, a CashGuard and an electronic shelf label, that's not really the truth. There is still ample opportunities to get more Vensafes into the Norwegian market or the Swedish market for that matter. Still lots of electronic shelf labels to get out, in particular in the Swedish market. We haven't even started penetrating the market with our self-checkout solution, the solution that we have developed out with the Baltics, both being cost-effective, as well as highly interesting from a theft prevention point of view. And Norway still haven't seen any sort of significant uptick in e-commerce. So there's lots of solutions that we have that are relevant for the market in the traditional StrongPoint geographies, and Magnus will talk more about that. But, of course, as you will always see, also see is that, the -- again, the sheer market sizes of U.K. and of Spain is, of course, of incredible interest, just starting to scratch the surface in terms of number of customers we serve in these markets. And then, of course, also the number of solutions we have with these customers is low. We're seeing the markets for our solutions starting to surface in these markets that we'll talk a lot more about when Alex and Lorena is on stage, but we are, first of all, very conscious about the financial results as of now and 2025, not reaching its ambitions. Number one. Number 2, we, at the same time, believe we have a very bright future in the positioning we have in key markets going forward. Okay. Then we'll cut me and then we'll have you, Magnus, talk a bit more about Scandinavia, Norway, Sweden, what's going on there? And what's the opportunities going forward? Magnus, please?

Thank you, Jacob. So, hi. StrongPoint, as you have said, Jacob earlier, is really a pivotal service provider to all major grocery retailer in Sweden and Norway. And we've been around for 30 years or even more. And through that period, we have evolved from being a mere vendor to be a strong, solid and trusted partner to all Scandinavian customers. And looking forward, our long-term prospects for continuing to grow and strengthen and expand our partnership with Swedish and Norwegian partners remain strong and prosperous. You told us also that we haven't lost 1 Norwegian or Swedish customer up to now, and that really tells you something about the level of relation we have with our customers here in our core markets. So looking back to 2023, I will not dwell too much on that since you have done that, Jacob, but we saw revenues shrinking, and we saw profits really melting away. And as a reaction to that, we are now rightsizing our Swedish and Norwegian companies. We are committed to increase efficiencies in Norway and Sweden, and we are committed in reducing costs. And we will do that by enhancing collaboration between the countries. We have a lot of similarities between our countries and, of course, to also enhance our cross-border synergies. So we are looking into customer support. We are looking into operations. We're looking into product management to increase efficiencies. And not only that, we're also fostering a culture of best practices sharing and methodology sharing across the countries to boost efficiency, but also to boost, let's say, the customer experience, how we can become even more relevant to our customers in both countries. We will also, in order to protect margins in challenging times, implementing a more strict and aligned price and margin controls also to ensure that we have competitive pricing in our markets. We're also aligning on sales governance to make sure that everyone involved in sales has clear and challenging sales targets. And moreover, we're also aligning on marketing. We will be more selective in marketing activities and campaigns and really focus on the activities that are impactful in our markets. And this is, I would say, only the starting point of a longer journey. We will continue to seek further synergies. We will continue to seek further ways of collaborating, not only to improve efficiency, but also to become more relevant and attractive to our customers. So this is only the first step. Norway and Sweden will remain separate business units, that's I think important to remember, but with 1 unified leadership under me, and that is to oversee that we will really streamline our joint efforts. So looking at Scandinavia, then from a commercial perspective, you have been into it quite a lot already, Jacob. But we could say that Norway and Sweden are fairly mature StrongPoint markets. We've been around for more than 30 years, and we have a really strong position here, but we still see a lot of interesting growth opportunities, both in our existing portfolio, but of course, also in new exciting products. And if we look at -- and if we divide our portfolio into a number of buckets, we see that we have a fair number of really highly penetrated products. Our key focus here is, of course, to optimize margins to make sure that we earn as much as we can from these products where we have a very large installed base, but also, of course, to secure that we will continue to have recurring and reoccurring revenues from these products with a very broad installed base. We have the products with less traction, but still existing in the market. Obviously, our focus here is to boost sales to continue to grow and to make them more present in these markets. We have a number of products where we haven't gained so much traction or even no traction. And our main focus here is to get the breakthrough to get one or more customer to embrace these solutions so we can get the reference so we can get the momentum. And lastly, we are also experimenting with new solutions following the trends in our markets. We see a number of areas with a lot of interest and potential from our customers. And our approach here is, of course, together with our key customer run pilots to prove the value for the end consumers, the customers of our customers, to prove the business case for our customers and, obviously, also to test the viability from a business perspective for StrongPoint. And just take you quickly through these -- the products. We have the CashGuard. It's been around since the '90s, and you will find them more or less all stores. Cash usage is going down. But lately, we've seen that it's kind of flattened out. It's not falling anymore. And I would say that's mainly due to lawmakers' efforts to make efforts to secure cash payments as a long-term option. So my view is that, cash will remain, although on a low level, but it will remain a payment method in Norway and Sweden going forward, meaning that we will have still a potential to sell CashGuards to our customers going forward. ESLs Jacob talked a lot about that. That's really at the core of a mega trend of digitalizing retail and stores. Norway, this [ adoption ] has happened like 15 years ago. In Sweden, we were a bit later on the ball. But last couple of years, we have seen a real uptick in demand. I would say, mainly coming, of course, from the mega trend of digitalization, but more importantly, coming from the real high-margin pressure coming from the inflation and the challenging periods that we've seen. So a massive uptick. And even though we have reached some traction in the Swedish market, the majority of Swedish grocery retailers are still using paper labels in store. E-comm or the picking, if you look at Sweden and Norway, we have a huge difference in online penetration. In Sweden, we are close to 5% now, small on an international perspective, but high in the Nordic perspective. Norway, I believe we are still even below 2%. And that difference in online penetration really explains also the difference in traction we have between the 2 countries. If I look at Sweden, we have 100% market share. So all large grocery retailers in Sweden are using 1 or more of our e-commerce solutions. So the main path of growth for order picking in Sweden lies in, of course, the growth of e-comm volume because we are getting revenue per transaction, but also to find venues outside in adjacent verticals, for example, convenience pharmacies, for example. If we look at Norway, really in the beginning of e-comm growth, we believe that when growth will come, our solutions will be the obvious option. Looking at the demographics and geography of Norway, which is kind of even more challenging than the Swedish one, a lot of people or not that many people spread across a quite large country. The concept of using stores as you're picking hubs and using our picking solution to become profitable. It's also an obvious path for the Norwegian market, but that's yet to come. Scales, highly penetrated solution. And I would -- the growth path we see here is that, self-service concept like unmanned store, self-checkout, mobile cell scanning, et cetera, is getting traction, and we see sales of self service scales rising as a consequence of that. Sustainability also a very important trend in the stores currently with store packed and store produced items drives the need for more costly and higher investments in package and wrapping machines, which we also see a traction now in the last years in the scale market. But I would say most importantly, is the effort that we have in StrongPoint have done in integrating AI into retail technologies such as scales have really paid off. So we have now a solution where you can -- with camera and AI technology, you will not -- yourself as a customer have to select what product you will be paying for, but you will be helped. And as Jacob explained earlier, that really smoothens the customer experience and it takes away the risk of fraud and theft. And if you would like to see one of those live, I think we have an interesting pilot here in Norway, REMA 1000. And as a part of their scan and go project, they have implemented, I think, in 20 or so stores this solution. So after lunch, take a look at REMA 1000 to see this promising technology. And I also think that the combination of AI with scales is really promising for further growth in -- for the scales. Vensafe, a mature product, more penetrated in Norway, less in Sweden. We see an uptick now mainly because of the increased theft that we see, I would say, in all countries, big problem in retail in the Nordics but also coming from the self-service concept, unmanned stores. So the Vensafe concept is really suited for the unmanned store because it can work in an environment where it's no one there. And the grocery lockers, as you mentioned, Jacob earlier, is we have 100% market share of that also in the Swedish market. So every big retail -- grocery retailer are using our lockers as one important last-mile option. But with that said, we still have 90% of the store in Sweden to be addressed. So even though we have a good start, we have still a great way to go and a lot of potential left. Norway is a bit behind in terms of online penetration, hence, also the penetration of lockers is lagging behind. But as online will grow, I believe also lockers will be an attractive last-mile option in the Norwegian market. Self-checkouts, especially the AI technology integrated with our solution. We have a wide adoption in the Nordics, more or less in every store, you have self-checkouts, but we have not been able to get traction yet. I remain confident that we will reach a breakthrough, but it might take quite a long time. The purchasing cycles of these technologies are long. And we -- they are -- we do not have that many chains in the Swedish and Norwegian market. We are involved in a number of interesting dialogues. So I remain positive that we might reach a breakthrough also in this space. Micro-fulfillment centers really in grocery retail, it's about fulfillment of e-comm orders. And you can see that there's also a very close relation to the online penetration in the various markets. In Sweden, historically, the big players have selected to go for central fulfillment -- centralized fulfillment centers. We see a shift in that trend now, and we have noticed an increased interest in a more distributed picking using the store network to provide a more agile and more low-cost and a more efficient picking. Some interesting dialogues going on in the Swedish market. And as you know, we have already gotten good traction in Norway, perhaps not in traditional e-comm MFC picking. But as online penetration also grows in Norway, this will also be a potential. Lastly, I would just briefly mention the new areas that we are testing out now autonomous stores has really boomed the last couple of years. I think now we have a few hundred stores live across Sweden and Norway, utilizing various concepts. Spanning from the very advanced, highly automated, utilizing cameras and AI that is tested in amongst many chains, and we have a solution there that is pilot currently here in Norway. We have also, let's say, more less investment-intensive solutions based on scan and go solutions, which is broadly adopted in -- especially in Sweden and starting also to get traction here. Here, we will soon announce a partnership and an interesting opportunity for Swedish chain. And I strongly believe that we will get traction in that space also outside Sweden. And lastly, we have a micro vending concept, utilizing AI, where we basically put fridges and freezers into working spaces to allow retailers to expand also into the working place, interesting pilots are rollouts happening as we speak in Sweden. Fraud detection, really interesting area now. We are running pilots in Sweden and in Norway, really not only addressing theft in the checkout, but also theft going on in stores, in the aisles, in the health and beauty department, for example, interesting pilots that we are about to conclude during this year. And lastly, one final venue we are exploring is support for efficient store operation. We know that high pressure on cost, high pressure on margins for our customers have resulted in an increased focus on really becoming as efficient as you can be in store. And they are seeking for various tools to support that. And we have an interesting partnership with the Swedish company, providing that currently, a few hundred stores utilizing that solution, and we see a potential, of course, to grow that outside Sweden and also into adjacent verticals. Yes. I think that's it, Jacob.

Yes. Thank you, Magnus. Lots of interesting things out here to -- if I were to put you a bit on the spot. I mean, I think investors are looking for, well, what's the potential right now? What would you say is the most promising sort of solutions and product areas for us in Norway and Sweden going forward in the next, say, 6 to 9 months?

I think we have a great pipeline of -- in the ECL space. So that's a mature product and it's been around for quite a while, but we have a lot still to be done in the markets. I mean, you have the reoccurring sales, replacing solutions that's been in place for 5, 10 years. And if I look in Sweden, we still have like 90% of stores utilizing the paper-based setup. So that's one big potential. I see the Vensafe, what I said as a result of both the theft issue problem we have huge in Sweden, I guess, also in Norway, but also the self-service concept driving that. And then generally, I would say, aftermarket, what we do in terms of the recurring revenues, I think we are very creative in finding venues to grow that on our existing installed base. So that's a big chunk that we also see an opportunity to grow further.

Okay. Great. Thanks a lot, Magnus.

Thank you.

That was sort of a little bit about sort of the mature Norway, Sweden market we're focused this one on. Now, I'd say, directly from U.K. luckily, you came in last night, Alex. I understand the airspace has been closed. So why don't you help us understand what's happening in the U.K. market in particular?

Yes, I will do. Thank you, Jacob. Okay. Thank you, guys. Welcome to everyone in the room and those online. Thank you for your time and listening to me present on the current status of the U.K., and our strategy update. As Jacob alluded to, the acquisition of ALS by StrongPoint in 2022, was an ambition to create a physical meets digital kind of combination of strategic aims to deliver a one-stop shop for the U.K. grocery retail market. Whilst it may have been a slightly bumpy ride so far, we are moving past those speed bumps currently into a land of opportunity that is relatively untapped for us so far. We have a very strong and consolidated workforce from the previous ALS business, who now are pulling in the same direction, who are working to one ambition, who have a fantastic skill set. And to say that I am more infused now 3 months in than I was prior to joining, it's probably true having seen from the inside the level of opportunity that we can generate. I would say that I am pleasantly surprised by the level of competency that we have internally and what that gives us as a market opportunity to go out to our extensive grocery retail network in the U.K., whether it be our internal research and development function, designing bespoke in-store infrastructure to the retailer's requirements, whether it be our mechanical electrical division, who are looking at innovative solutions from outside of the grocery landscape to bring into the supermarket network and improve efficiency and sustainability. Whether it be our general civil construction capabilities that allow us to compete on 4 main tender projects from full installation car park works, in-store electrical fit-out, we're able to offer the retailer, but really, really expansive coverage of solutions from a physical perspective to create a strong platform for the digital solutions to be launched into their stores with confidence. And so, to that end, my kind of initial reaction is that we have a very strong retail partnership network. We're with all of the major players in one way or another. We are focused on delivering operational efficiency internally and being able to pass it on to our customers in terms of general efficiency and quality of execution. And that leads on to the 2 major priorities, key focus areas for me coming into the U.K. business unit and looking to drive performance in that area. The first one being to bolster that shop fitting business and to really expand on the existing relationships, go deeper with our current retailers, be the trusted vendor of choice for both physical and soon to be digital solutions in the U.K. Looking internally at structure, Jacob alluded to some changes, ensuring that we have the right skills, competency and capacity to deliver, exceed and overwhelm our customers to build that reputation, to build that level of trust that allows us to create that recurring revenue that Jacob mentioned that's crucial to underpinning our day-to-day operations allows us to go forward with confidence on those technical products that take a slightly longer sales cycle. Now it leads on to the kind of technical solutions and how we penetrate the market. We're looking at a very detailed customer-centric sales strategy that puts the right product in front of the right retailer at the right time, listening to their pain points, understanding their challenges commercially and operationally and driving those products in at a time that is suitable, both with existing contracts, with existing relationships, but to the right person at the right time and ensuring that we are relevant to the market forces that are impacting them as a business commercially and operationally. And what are those trends that we're seeing in the U.K.? What's causing pain for those retailers? And how do we address it? And we almost get a bit of a glimpse into the future from what we've experienced in the Nordic markets. The first one is the rising cost of labor in the U.K. It's no surprise that everyone is feeling this through inflation. But in the U.K. specifically, this month -- in this month, we raised our national minimum wage by 9.8%, which to the grocery industry is a significant challenge to overcome. What that means in real terms. So Tescos have increased by 9.1% on the hourly rate to their in-store colleagues, that's an investment of GBP 300 million in labor costs this year. ASDA, 8.4% increase, GBP 150 million investment. At Sainsbury's with whom we have partnered have announced a 9.1% increase in 2024 off the back of a 9% increase in 2023. That's a GBP 500 million investment over the last 2 years in labor cost alone. And that's in the face of a strategic ambition to remove GBP 1 billion of cost from their cost base over the short-term, creates significant pressure on them to perform in a slightly different way, look at products and solutions that are on the market to reduce that cost base. But that isn't the only cost and challenge that we're seeing. Jacob did alluded to a general rise of theft. But in the U.K., very specifically, it's becoming an increasing challenge both commercially and very high profile from a society perspective in terms of the level of challenge that in-store retail colleagues are facing on a day-to-day basis. Retail theft could attribute a loss of GBP 7.9 billion in 2023. That's 32% more than 2022, and there is no sign of a better situation in 2024. Not only do the retailers need to deal with that from a cost perspective, but you also have an obligation to provide a safer working environment for their workforce. It's very sensitive at the moment. It's a very high profile. And those kind of rising challenges lead very well on for me to talk about our product portfolio, how that links to our market opportunities, where we can play, how we can penetrate and which of those products that I think will be most valuable to our retailer partners in the short-term. I'm going to focus on 6 of those for this conversation. The first one being Vensafe off the back of the rising theft challenge. But it's not just an anti-theft device. And what I'm hearing from the market with -- particularly in the U.K., as whilst there is an opportunity to remove theft as a potential risk entirely, it also leverages further opportunity in age-restriction being able to validate people's age. It allows for better merchandising opportunities at the shelf edge. It reduces the sales friction that you experience from tagging products or putting them behind glass shelves. And it creates a more appealing customer journey. People are starting to see this as a much more beneficial tool rather than a restrictive measure. And that's a very important part of the message we're getting out into the U.K. market. The next one is the AutoStore and our ability to offer micro fulfillment as a solution. Kind of an industry close to my heart and what I believe is the fastest route to profitability in grocery e-commerce. Our partnership with AutoStore allows us to offer 3 temperature zones. The technology is market leading. The strategic view is beginning to shift with the retailers as our penetration levels in the U.K. hit 10%, 12%, 15% of sales, the store becomes less of a store, it becomes more of a warehouse. As that happens, the availability levels to decrease for everyone, the in-store customer and the online customer, and we begin to look at how we protect those positions for both customers. I genuinely believe that this will be something that takes off very quickly in the near-term. Leading on to an equally cost-efficient e-commerce solution, and that's our Grocery Lockers. Our Grocery Lockers are the most profitable way to collect an order from an online customer -- for an online customer. The most convenient solution, a good locker order from a customer collection is the best collection proposition that can be built. Getting it right is important. The knowledge and experience that we have internally of where to place lockers, what customer demographically suit, how to build an operating model around them are equally as important as the technology that they enable -- that is enabled. And so we're positive around the scope of opportunity here. There has been a slight fall start with lockers way back, putting them into tube stations, leaving them unattended, which has not been successful, but what we're seeing from a market perspective is that the retailers are ready to go again. The technology was not the problem. The operational launch was the challenge, and we're ready to go again. Both Jacob and Magnus alluded to the value of shelf-edge labels. And in the U.K., the market is fully aware of shelf-edge labels as a consumable. There is not a retailer who hasn't piloted them, who hasn't done multiple proof-of-concepts. But full scale rollout has been inhibited by the business case to get to 1,000 stores with any given retailer. And there is something required to bump that business case to go full tilt across full store networks. And we believe that's through our order picking, replenishment by light and the connected store that allows for multiple use cases to go through the label. Simply changing prices does have a stand-alone business case, but we think we can accelerate that much harder and much faster. We're starting to see a tipping point on shelf-edge labels that we would expect to really hit home over the next 6 to 12 months. In terms of self-checkout, similarly, every retailer in the U.K. is entirely up to speed with self-checkouts. They've deployed them in certain different ways. Our opportunity here is to understand the existing contracts and understand our USPs. We have significant USPs and our AI capabilities. We have a good price point on our hardware. And from the StrongPoint U.K. perspective, we have the ability to install, service, maintain all of those products regardless, agnostic to the hardware. So we have multiple conversations around self-checkouts. Our role is to get for us -- with my sales function is to get those in front of the right person at the right time and really demonstrate the value that we can give to them, particularly around the rising fraud situations that people have mentioned. They've created new problems in terms of checkout friction. People are now having to call for an assistant. And as soon as that happens, they may as well be stored on a manned checkout. Our job is to make sure that we make a frictionless experience at the self-checkout, and that's what we're working towards with our technology. And the last one is Order Picking. Outside of the discounters, all of the U.K. retailers have either a first-party internal solution or a third-party vendor relationship. Those vendor relationships will come to an end of contract and the first-party solutions may not stand up to our level of productivity. I believe we have one of the highest productivities in the world. We can demonstrate that. We see it in the Nordic markets. We delighted to have the opportunity to prove that in the U.K. with Sainsbury's as an anchor to be able to show what we can really do. If we hit the productivity levels in the Nordics that we have in the U.K., I think it will be a very quick process to start putting fear through some of the other retailers who all of a sudden are significantly less productive than one of their biggest rivals. And that brings on to kind of the account growth opportunity. I'm talking with Sainsbury's as an example. So we have signed the Order Picking contract, but we should not be under any illusion that the hard work does not start now, delivering this contract, delivering order picking in the way that we've promised to the speed that we've promised and the time scales that we promised is an absolutely critical factor in our future success with them as a retailer and in the U.K. market. We should be under no illusion on that. So our absolute focus is on delivery and execution with those guys, making sure that we hit all our commitments that we over deliver, that we overwhelm them and that we delight them when we deliver that product. That will be critical to the other conversations. The way that we are going to grow is through internal advocates who believe in our product as much as we do, who have bought into our organization as much as we are and are able to go and do the internal selling on our behalf. That aspect is exactly where we're aiming to go. The products that we see on the screen are -- have compounded benefit when added to order picking. They improved the customer experience as a general level, and they give the retailer a significant amount more incremental benefit from their order picking through something like pick-by-light or a connected experience through picking through to lockers. And we have a very, very strong opportunity to drive the U.K. through to the 4.7 products and beyond underpinned with a very strong shop fitting business and being able to demonstrate a whole range of capabilities across the entire market. The future looks bright, and I look forward to coming back in 12 months to give the next strategy update on how we're getting on with that.

Thank you, Alex. And I mean you -- as I said, you came lucky last night.

Yes.

Directly from probably the most important retail tech forum in the U.K. with lots of grocery retailers. I mean could you maybe shed some light on what you learned from those or that one day you were allowed to, to be there and with what you just said now?

Yes. So everything I've just said is absolutely bang on trend for what we heard yesterday. Less about individual products, but the things that really excited me, you always hear the same buzzwords, generative AI, connected store, store of the future. And when I walk around, I see people do a small part of each, maybe well, maybe not well. I see us being able to handle the entire journey for the retailer. But the thing I took away the most from yesterday was 2 things. One was the footfall. So if the footfall matches, the budgetary ambitions of the retailers, then we're in good shape. It was exceptionally busy. But equally, what we were hearing on the stand for the first time was very targeted direct questioning that looked to align to a genuine requirement. There weren't people there just making who you guys, what do you do? It was talk to me about Vensafe, how do I put it in my store. And to hear that level of kind of interrogation was really positive message for us. So it was a good show, and we look forward to moving on.

Good to hear. Great stuff, Alex. Thank you so much for the walk-through of the U.K. market. We have one other major markets at this future major market to go through and that is Spain. And with us here, we have Lorena. So Lorena, please help us understand more about the Spanish market and not least, what's happening on the cash management side?

Very good. Thank you very much. Okay. So good morning, everybody. So let's make a deep dive in my country, Spain. Well, today, majority of the business in Spain, 15% -- only 50%, sorry, is related to grocery retail. We have been successful with clients like Alimerka, where we have been selling cash management solutions, ESL or lockers and To Super with self-checkouts, lockers and picking. So this is a very good news towards the 4.7 strategy. And also, we have been able to sell our first solution to 5 new grocery retailers from a list of 50 we have in Spain. But we have to recognize that still the majority of the business is related to cash management into Orica sector. This is changing, fortunately. Thanks to the breakthrough we have with Mercadona. Mercadona is going to be a door opener. The sign of trust of serving the biggest grocery retailer will eliminate any concern about us being new in the market. So there is a huge potential, and we will be working a lot more towards grocery retail coming forward. But let's talk a bit more about Mercadona. So they are a family-owned company, as Jacob was mentioning before, they have the 26% of market share. So the second retailer is Carrefour. They are super big. They only have the 10%. This means Mercadona is 2.5x bigger than Carrefour. They are soft discounter, but in terms of quality, for instance, here in Norway, we could compare to Jacob's whole debt, because they have a super quality daily counters. We see them as an absolute winner and one of the crowned jewels in Spanish business, because we can compare them to Inditex, the owner of Zara to Telefonica or to Santander Bank. So we have a really good deal here. We have sold cost management to Alimerka, but we have to recognize this is not the way to handle cash in Spain. Most of the retailers are handling as manually. Like in Norway, you were doing in, I think, 20 or 30 years back. Half of the transactions in Spain are made in cash. And the cash going through Mercadona is representing the 10% of all the cash going through the Bank of Spain. Mercadona has a very particular thin pneumatic tube system installed in all their stores, and so do another 5 or 6 retailers we have identified. They launched a tender 3 years ago to over 13 suppliers worldwide. And we were the only ones making a super fast prototype as a proof-of-concept. And since then, we have been working together for the last 3 years. We have just installed the first store, and now I would love to show you a video of how this installation looks like. So the first video we're going to see is related to how the cash is handled today without our machine, okay, completely manual. So for instance, this is a transaction with a woman that as you can see, she is seeking for some coins, she is counting the coins, and so that's the cashier. Again, the customer counting. So this is taking a lot of time, a lot of time. And this is in the half of the transaction, this is really, really a lot. And now we are going to see another operation, which is that after a certain threshold, they need to send the money through the pneumatic tube system. So the first thing the cashier is doing is to count the notes until that threshold. And she is bundling up into a blister, plastic blister, and she is introducing it into the pneumatic tube system. You can see this is happening in front of all the customers that they are not only waiting, but this is, of course, a safety issue, because this is a lot of money. Okay. So now let's see how the installation looks like. So you can see all the counters here, and this one has our machine fully integrated into the existing checkout. You can see as well the pneumatic tubes coming from the different checkouts, okay? And now let's see how the machine is working, let's see a transaction. So the customer is able to put all the coins in bulk, super easily. And the notes as well in bulk in only 1 slot. And now the customer is going to receive the change super fast in a very ergonomic way, because our solution is unique on giving the coins at the same 8 than when we are introducing them, the same for notes super fast, isn't it? Okay. So transactions are much faster and easier for a staff checkout. But also, we can integrate this in the self checkout and again, this will be an unique solution to the market. What you haven't seen is the back office. So what is happening and the uniqueness of our solution is that we are able to send automatically the nodes from the front-end machines through a blister, through the pneumatic tube installations, we are only having one blister flying to the different checkouts, and going to the back office, which is again automated and is taking all the notes. What has happened nowadays in our Mercadona store is that all the blisters coming from all the different deals are coming to a safe, and in fact, the safe, there is a very big bag, which is accumulating all the blisters. This is a problem because there is a capacity limit. All the blisters are occupying a lot of space, and this makes that the cash-in-transit companies they have to come in a daily basis. What we are changing now is that, as we are sending the notes, we are being able to count the notes, to shorten them and to classify them in a flat and other way. We have a capacity of up until 12,000 notes. And this makes that the cash-in-transit visits are drastically reduced. So this is a huge saving for the customer. We have achieved to develop exactly Mercadona's President vision. After 3 years of development and a constant follow-up from the client, we have achieved the first milestone, which is, we have been getting the positive reaction from employees, from the management and even more importantly, from the customers or the boss, how they call them. The feedback has been, as I said, super, super positive. I am sure this is going to be an absolute success for Mercadona, but also for many other grocery retailers. We control the IP of the whole solution. We have exclusive and perpetual rights to sell into all the relevant segments for StrongPoint. Also, the agreement give us with our partner, the option to acquire the remaining 40% of the joint venture we have when we want, at a fixed defined price, sorry. Okay. Well, let's talk about the benefits. So they are super wide. The total cost of managing cash is hugely optimized. There are 0 manual touch points from the staff. The number of pickups from the cash-in-transit is dramatically reduced. Transactions are much faster, and this is not only improving the customer experience, but also, we are optimizing the staff needed for this kind of operation. The handling cash is now as easy as handling card payments for employees. Now they have more time to better assist the customer and they can even start bagging their goods. Finally, the whole process is much safer as nobody is touching the cash anymore. Our market opportunity with CashGuard Connect is huge. Only with Mercadona, we will have a significant revenue. We are now working a lot preparing the industrialization, the production, and we expect to have the first output for H2 2025. But we have a huge opportunity again only with Spain, if we take the 5 other grocery retailers who have a pneumatic tube system in their stores. We could be talking about EUR 0.25 billion only with this 5, okay. And if we talk about Europe only with the U.K., the last acquisition we make for ALS, the name means Air Link System, and this is exactly related to pneumatic tubes and they are still currently installing them in a lot of clients. So only for the U.K., again, huge potential, but still we have France, Germany, Italy, many countries. And then here, we would be talking about a potential of EUR 2 billion. But what about the rest of the solutions from a StrongPoint portfolio? Well, okay. Talking about cash management, what is very interesting is, as you can see, the penetration is only 5%. And why is that? Alimerka has been the only customer really deploying a cash management solution, which, by the way, with CashGuard with our solution and why the rest are not really installing cash management. So there are 2 reasons. The benefits when you are connecting a front-end solution and a back-end solution are really, really wider. This means that the return on investment will be faster and will be better because the value generated is completely different. And secondly, we have a capacity issue, because as you have seen, the cash we are handling in Spain is huge. So with our CashGuard Connect, we are solving this capacity issue, and we are sure we will be selling a lot more thanks to this. Regarding self checkout, most of the Tier 1 clients, the grocery retailers, they have already deployed a self checkout solution many years ago. And very few Tier 2 are starting to test it. This is coming more and more interesting in the market. And I see a huge opportunity not only for Tier 2 and Tier 3, but also for Tier 1 renovating the equipments. Then ESLs, after the salaries increases inflation, this is becoming more and more demanded. There are already several retailers who are -- who have deployed ESLs. So again, a lot of potential here. Regarding scales, this is, of course, deployed everywhere. All the retailers have a solution, either in the sales surface, either in the checkout area. But what is new is our artificial intelligence functionality. So we foresee again an opportunity to introduce this functionality. And then finally, regarding e-commerce. Well, e-commerce penetration is only around 2% in Spain, but the retailers who have an online were ongoing, they are growing in a 20% basis and even more. We are having a lot of demand on grocery lockers solution because they see -- this is making a lot of cost saving in the last mile. We have Alimerka case in place. So we foresee to grow with our -- with the customers alongside with their growth in terms of e-commerce coming forward. So I think that was it from my side.

Fantastic, Lorena. And of course, super exciting to finally reveal who we've been working with for so long. To some extent, it resembles Sainsbury's is obviously a huge client, still investments needed. What you've just shown now is the prototype. But we need to set up a production facility. Can you maybe elaborate a bit on what you're doing to set up that production facility and the time line for when first revenue will start?

Sure. So what we have seen here is a prototype. It's even -- there are a lot of pieces 3D printed. So this is a real, real prototype. Now we are finalizing all the designs, creating all the documentation needed to give to all the suppliers. We are launching all the molds, plastic molds for all the pieces that needs to be injected and supplying all the critical parts, electronics and et cetera, setting up the perfect place for production and assembly, which is super important and setting up all the quality revision we need to make sure we are ready for very big volumes. This is what we expect, yes. And the first output, yes, would be for H2 2025. Yes.

Great. I mean, a super big opportunity, it will take work to get there. For Norwegians, I must say it's kind of difficult to sort of understand the sort of pneumatic tube system, it's very remote. I think most people think about [ tooting ] the parliament when you think about [indiscernible]. But that's what cash management is like in not only Spain today, but also elsewhere. I truly believe this is a revolutionary solution. But again, as with Sainsbury's, there's a lot of hard work that has been done. Well, now there is even more hard work to be done. And I would also foresee that in addition to penetrating the market where we are present, where we'd be using licensed or partners to set a solution elsewhere.

Yes. Thank you very much. Thank you. Okay.

Super exciting, Lorena. Thank you so much. Okay. Then final stage of this strategy update session before I myself do some concluding remarks and Q&A. Marius, people are interested in numbers, in particular here. Why don't you share the financial updates that you have to give.

Great. Thank you very much, Jacob. Hello, everyone. I will try to summarize a few of the assumptions behind the estimates for 2025, and also touch upon some status on the M&A side and financing updates. So we did show the estimates for the revenues of EUR 1.5 billion to EUR 1.8 billion -- sorry NOK 1.5 billion to NOK 1.8 billion in revenue and an EBITDA margin of 46%. Now this may seem as a big range given it's just slightly more than 1.5 years until that will be hopefully delivered. And there are a few key takeaways to understand why this -- why we're showing this range. First of all, as we have been saying a few times, the market conditions are challenging. On the other hand, we cannot rule out anything as a product and project-oriented company. We do have limited visibility. And we also have -- even though we do have recurring revenue, we also have still a limited impact on the rollout pace of our customers. So this is why we are showing this range. We have seen previously with product sales that when market condition -- market conditions are improving. So are the product sales quite rapidly following thereafter. So this is the range. I will now go through the segment reporting that we have being the Scandinavian segment and the International segment. So I will start with the Scandinavian segment. We're coming off NOK 630 million in revenue in 2023, estimating revenues of NOK 650 million to NOK 750 million and EBITDA margins remaining pretty much the same, perhaps strengthening a little bit. We talked quite extensively about the current market conditions. This is what we're seeing right now. For Norway, we are looking at increases within this in-store deliveries, mainly ESL deliveries. This is partly offset by what we could say is an expected reduction in the sale of traditional CashGuards. It has been going on for some time. The reduction has been smaller than perhaps initially estimated, but it will certainly offset some of this initial growth. For Sweden, we are also looking at increasing in in-store, also being ESL, as Magnus talked about and also within the self-checkout space, and even the Vensafe, where we still touched upon a big opportunity. So we're looking at stable margins for the Scandinavian segment, perhaps strengthening up to 7% to 8%. For the International segment, we delivered NOK 700 million in revenue and a negative margin of minus 1%. We are looking at estimates of anywhere between NOK 850 million, up to slightly above NOK 1 billion. And in that, with this revenue growth and the scalability and being able to have operational leverage, we are looking at a fairly good improvement in the EBITDA margin, up to 5% to 8%. So in the International segment, we have not necessarily a mixed picture, but we have the Baltics and Finland. We have assumed an increase in self-checkout in addition to the recurring revenue base that we have within the POS and the ERP business. For Spain, it's all about rolling out this new CashGuard Connect, very enthusiastic about that. For the U.K., it's 2-fold. It's restoring the shop fitting volume. And there will be increase as we expect within the e-commerce. And again, I touched upon the margin improvement coming off, obviously, with minus 1%, absolutely not happy with that, during the first part of operational leverage with the revenue increase to 5% to 8% in EBITDA. So these are the 2 segments that we report on as far as regional markets. That could be summarized into also another way of looking at our company is the product portfolio separated into in-store and e-commerce. So for in-store, again, a big driver being the ESL projects, self-checkout and the CashGuard Connect, looking at anywhere between NOK 1.3 billion to NOK 1.5 billion in revenue. For e-commerce, an estimated increase of roughly NOK 130 million to anywhere between NOK 200 million and NOK 300 million, with an increase in the order picking. Now we do have some visibility, obviously, with the order picking and the new contract with Sainsbury's. We're also assuming a growth in grocery lockers and a potential kicker for the AutoStore projects. So these were some of the key assumptions behind the estimates for 2025. If you move on to the topic of M&A. M&A certainly was a part of the initial 2025 strategy, and it was part of the ambition of achieving NOK 2.5 billion in revenue. We made 2 acquisitions, 1 in the U.K. in 2022 and 1 in Finland at the end of last year. And the investment rationale for both of these acquisitions were not revenue-driven necessarily. We did this in order to get regional footprint and to get the infrastructure in place. And I think we have touched quite extensively about our thinking so far about the U.K. investment, came off to a good start. Obviously, some challenging periods now. But coming out of what we would say is almost a completed integration. We have done a lot of things on the IT side. This will help us to improve the collaboration cross-border. And thereby, we should be able to expand the offerings as Alex has touched upon. For the acquisition in Finland, obviously, still being early days. It will be a stand-alone business unit until further. It will be reported as part of the Baltic region. And the main focus right now is on commercial synergies and cooperating with the Scandinavian unit and the Baltic unit. Now looking ahead, it's certainly our #1 priority to manage and to improve the current operations. However, that said, we do have an optimistic approach to M&A. M&A can and will always be an important tool if it's made at the right time and the right conditions. This could be, for example, adding a complementary solution that could improve our unique selling offering or our way of selling out to the customers. I think it's also fair to say that we could have made more acquisitions during the periods, especially in 2020 and 2021, where we saw fairly high M&A activities. On the other hand, there were high valuation multiples. And in retrospect, it was probably wise to be patient from that perspective. If we move over to a financing update, it's basically 2-fold as far as our obligations. First of all, we have the leasing obligations we have in the balance sheet lease obligations of around NOK 100 million, of which about NOK 87 million is not interest-bearing and relates to our premises. And this increased quite a bit in 2023 due to new premises in Norway. So that's the lease obligations. More importantly, perhaps is the net interest-bearing debt, which has increased from virtually 0 in 2022 to now NOK 77 million at the end of the first quarter. This is due to the operational performance are even more importantly, planned investments, which we are now showing the effects of and the dividend payment last year. I think it's important for us, obviously, to manage the debt. However, we still have this investment program that needs to be delivered on in according to deliver on our business plan. We talked earlier this morning about an important milestone. We signed a new loan agreement with a leading Scandinavian financial institution, where we refinanced our bank overdraft, increasing from NOK 150 million to NOK 200 million. And this includes a revolving credit facility and working capital financing. We expect that to be completed sometime during the second quarter. Now this is important to us for a couple of reasons. First of all, as we have been seeing here today, we are taking on bigger international customers that will require an increase in working capital requirement. And secondly, last quarter, we said that we had a covenant waiver for the net leverage covenant. There will not be a net leverage covenant with this new credit line, so that will no longer be needed. There will be a ratio -- equity ratio of 30% covenants, which compares to our current balance sheet of 46%. Now we have had a strong history of paying dividends. And it's just to repeat that this is absolutely our clear ambition. And this policy will continue, but for 2023, as we showed, we didn't pay out any dividends. The focus now is really to, again, manage that and to improve the operations. So with that, I guess we're off to the concluding comments.

Thank you. Marius, will be here with me. So -- but let me do the concluding comments or remarks before we open up for Q&A and to the comfort of those of you here in present, you will be granted the first sort of questions. There has to be some benefits of being here in-person. But concluding remarks, I think with the financial results that we've just shown also in Q1 with the release of the ambitions, it's also just useful to sort of take a step back and reflect a bit on sort of what kind of company StrongPoint now in 2024 versus 2020, when we announced the strategy. I'm not here to give a history lesson, but when we were in 2020, we were actually a company that had offices in multiple places, including exotic Malaysia, Russia. We also had physical label production business, and we had a cash security business, basically production of the blue bags that you would see Nokas or Loomis or others used to transport goods. We have now through divestments, but also new acquisitions and clean above the portfolio of partners make ourselves into a more focused company to serve the grocery retailers. So more than 80% of our revenue today stems from the grocery retailers. Resilient? Yes. It doesn't mean that the investment pace keeps on going upwards all the time. There are certainly bumps on the ride, which we experience, but it's in accordance with the strategy that we've set forth. Secondly, we were mainly selling hardware with some service and support agreements. And it's not that we've gone completely the other direction. I mean, we're still selling hardware, where it's important to sell the service and support agreements, but we're also moving in a direction to start selling more and more software-based solutions. And of course, the most preeminent example in that respect is the Sainsbury's deal with Order Picking. So that is absolutely our focus going forward to increase the recurring revenue and also recurring revenue. I think it's also important to recognize that we -- in 2020, we were a company that was specialized our capacity and competence on the solutions we had. Obviously, with a broader portfolio of solutions also geared towards the future, we've had to get a new competence. Alex here is a great new example of that. We have our own [indiscernible] to store team. All those things position us in a much better way to also capitalize on the opportunities that lies in the more upcoming and technologies that we have in our portfolio. In 2020, we were already serving all the grocery retailers in Scandinavia and the Nordics. And nothing bad about those. I mean those are big companies, very demanding customers and has demanded a lot from StrongPoint. But it's also fair to say that when we're now starting to serve the top, the very top Tier 1 customers in Europe that demands something more. It's also getting a lot more attention and it's also getting a lot more size in terms of potential for the opportunities we have. And lastly, we were, to some extent, dependent on 2 to 3 major customers in Norway and Sweden. And yes, certainly, we had a diversified risk portfolio with other kinds of businesses. But now that we have channeled into 9 areas with more grocery retailers, we at least have a portfolio for being more diverse as well. So I'm very positive about the sort of platform we've laid for the future growth going forward. Of course, this would not have been possible. We're not been serving the grocery retailers to that extent that we have been for many, many years. So this is building on the great starting point we had in 2020. Now, looking forward, it's fair to say that on the one hand side, we have challenges, but also opportunities in the core markets that we're facing. We're doing cost measures, we're doing commercial measures, restructuring parts of the business, in particular, in the more mature markets we have. But there's also lots of major opportunities that we have. One is sort of to deliver on the big project in U.K. and Spain and make no mistake, that is getting the absolute full attention from the management team and board to deliver on those. That will be instrumental to also be growing the portfolio and the customer base in those countries. Marius rounded off here with where we will be going more like an estimate or maybe even guidance for 2025, those are no longer ambitions. 2025 is a little bit more than 1.5 years away. And clearly, the profitability levels of 4% to 6% is not what we aspire to be or should be. So to help investors just to understand a bit more about sort of what are we sort of aspiring to be. And the level of uncertainty and I think the general market makes us as management and board, not putting a sort of member out of time for -- at a specific point in time, but rather saying the 3 things here. Number one, we will be, of course, you might argue, grow revenue not only because of inflationary pressure. But at the end of the day -- growing the revenue and growing the portfolio of solutions we have with customers is at the end of the day, the testament of the solution that we have that those make value for our customers. So growth will be on the agenda forward. But social profitability. And as I said, 4% to 6% EBITDA that we're kind of estimating for 2025, that's not the level where we want to be. When we are ending of 2025, we should be having the full run of order picking up and running with Saint Spritz. We should also then be having the proper production setup for the CashGuard Connect solution, and also, of course, having traction on the number of clients and potential solutions that we have. And that means that we are aspiring for 10% or more than 10% EBITDA going forward. I would like again to repeat also the dividend policy that stands. We have as an ambition to pay dividends also going forward. We will be managing that, but we also have 2 in this period, manage the requirements to deliver on these super exciting projects that we have. So last page before Q&A, what are the major priorities for us at StrongPoint. On the one hand side, ensuring that we have the profitability and traction that we should be having in our traditional markets. It's not fair to say smaller, but compared to the U.K. and Spanish market, those are smaller markets, but we have a good penetration on many products and solutions. We should be having a lot more penetration in many of those, and we need to handle our cost levels, so that we also have a significant and positive contribution profit-wise in those markets. On the other hand side, it's, first of all, now deliver on these huge opportunities that have -- we have been given. We're humble and proud to have been given these opportunities. And as Alex has this absolutely priority now is to deliver on the expectations from the customers, which will then in turn give us additional opportunities with these customers and more customers. So with that, maybe I can ask you Marius to get up here with me. And just respectful of time, we'll try to do a couple of questions, maybe starting with the audience here and then following on to the questions that I now have been received online.

A couple of topics that haven't really touched today. One is distributor strategy. I know we still have some good distributors, Ireland, France, maybe Germany, and obviously, in South Africa. What is your distributor strategy? Do you think an increased number of distributors would drive your revenue? Or what do you think about distributors?

Yes.

And the second topic is general view of the competitive landscape.

Okay. So first, I mean you're right. I mean we have -- we didn't touch much upon that. We used to have some 50 partners worldwide, we have focused that efforts to a few selected partners. As we mentioned on the cash management side, knowing that very well. You have Bullion in South Africa still being a significant partner for us, along with French Solution and in Ireland. And we're continuing to nurture these absolutely. We then also have new partners. One example of that is in the U.S. Peak Technologies. There's been a number of companies, certainly Norwegian companies that have tried big luck in the U.S., and that could be a very costly experience. We recognize that the -- much like the European grocery retail landscape is very different -- I mean Sweden certainly is a lot different than Norway, and U.K., not to mention Spain, that's the same for U.K. So rather than trying out a luck in the U.S., we're taking the solutions which have the most traction in the U.S. and using that through partners and Peak Technologies is now still ongoing with a very exciting click-and-collect locker pilot. I noted some questions about that. So I can say that when we are dealing with very large grocery retailers also in the U.S., the time from pilot to decision is a lot longer than we would normally have in Norway and Sweden as an example. But you're right, partners is an important contributor. We are still focused on the core markets. And of course, with the wins like we've had with Sainsbury's we've also received multiple inquiries from elsewhere. And we try to sort of pinpoint and pick those partnerships that we believe can make the most sense we're not in the business of having many partners, but rather having good and solid partners. That was number one. Number 2, general competition. I mean, if you start dissecting sort of solution-by-solution, you will certainly find many different kinds of competitors. So that could take half the day. So let me not do that. But I think it's fair to say that in many instances, what StrongPoint offers is not only the product and solution, but it's also the fact that we are a StrongPoint with a number of solutions. It makes the service easier, makes the support easier and in the cases where we've been serving customers for a long time, then that trust is something to be built on and cherish. So yes, certainly, we are experiencing competition in a way that's a good sign. We're not the only one going for that market. In most cases, we feel that we are being competitive. So what we're seeing in today's market and it being tough, it's not because there's a lot of tenders and we're losing all of those. It's just that the tenders have been taken longer.

Are there any more questions from the room? Otherwise we'll go to online? No. Okay. I'm also very conscious of time, so I only take a couple. We have a lot of very specific questions, so I'll take the broadest ones. Is StrongPoint's double opportunity still relevant?

So the double opportunity we talked about was the growth in in-store -- I'm sorry, in e-commerce, but also the need to automate solutions in-store. And that still holds true. I think at the height of the pandemic, we believe, certainly, as the -- I should say, the market that e-commerce will be a lot bigger portion in 2025 than what Marius says, but those are still the 2 major opportunities going forward and to some extent going hand-in-hand. We see that the growth of e-commerce and the size of e-commerce in -- with Sainsbury's also has the potential to trigger in-store solutions that we offer. So yes.

One final question that is relatively broad. In reaching your new targets, how much of the revenues do you expect from existing customers versus new customers?

What should I say, it's primarily existing customers, but obviously, with 2 of the big projects that we have discussed, obviously, Sainsbury's still being an existing customer with ALS. The Mercadona project will definitely kick in. But I think in a broad perspective, it's upselling on the existing customers. It's usually a lower cost of customer acquisition and easier to be able to penetrate.

Any further questions in the room? No. I think that's it.

Great.

Okay. So I think with that, well thank you all for showing up here. And thank you to all of you on the web. Have a great day onwards.