Tervetuloa. Very nice seeing all of you today. My name is Christian Gebauer. I am the Group CEO of Relais Group, and today I will share with you the Relais Group story, what we are all about, and what we are focusing on at the moment.

First of all, let me introduce Relais Group as, I would say, the European leader as a serial acquirer in the vehicle aftermarket. Our business model is quite simple. We want to identify the best companies within the vehicle aftermarket in the Nordics as well as in Europe. Then we want to attract these companies to our ecosystem to join the Relais family. And then finally we acquire the company. And then the development phase starts for a serial acquirer. It is as important as acquiring companies to make sure the companies continue to have good development after they have become part of our group.

We have some cornerstones in our model, some philosophies that we really believe in. First of all, we really think the local entrepreneurship among the management teams in our companies is critical to make sure that each company continues to develop and reach its full potential. This means it's the local management teams that take the daily decisions on how to drive their company, how to develop their company, how to make their customers happy. How to get loyal customers.

Then we come to focused M&A. We don't just want to buy any company. We want to buy the niche-leading companies in the vehicle aftermarket. That means we want to find companies that have identified a certain slice of the vehicle aftermarket, a certain geography, a certain offering where they are the leader, where they are the go-to player for the customers that want to have the best service and the best products within that certain niche. And then we need to attract them, and we need to pay a reasonable valuation to make sure that we get a good return on capital employed in our group.

And then we talk about disciplined capital allocation. It partly comes to the acquisitions, where we need to make sure that we don't pay too much and that we buy the right company, but it also comes to allocating capital across the group of companies that we already have. Where do we have a lot of cash sitting in inventory? Do we get good returns from that cash, or should we take that out and allocate that to another company in our group, always making sure that we get the best returns from the cash that we have at hand. Our focus is clear. It's long-term EBITDA growth and making sure that we have a good return on the capital that we deploy.

During the last some seven years on the stock exchange, we have developed a group of almost 30 companies in the vehicle aftermarket, very much focused on the Nordics, but taking the first step out in Europe during last year when we acquired Matra Group down in Benelux. We are some 1,700 professional colleagues in the group, and we operate across eight countries today. We split our business into three business areas in the beginning of this year, to make sure that we have the companies that are related to each other in the same business area so that they can share best practices, we can identify where we best allocate the cash that we have, and make sure that the companies have the best opportunities and possibilities to continue to develop well in our group.

So it's the commercial vehicle services, the repair and maintenance workshops. We have the leading independent workshops in Sweden, in Norway and, of course, in Finland. It's a products and solutions business area where we have our own brands that are the leading brands in the niche that they operate, where they have a high customer satisfaction and customer loyalty and a good pricing power. Then finally, the technical wholesale. It's the distributors making sure that the parts and material are available for workshops and for the industry to serve and keep the vehicles on the road.

So I talk about the niche leader. So let's think about football for a moment. If you are a good football player in Finland or in Sweden, you might want to join Manchester United or Barcelona or whatever company is the best company that they would like and dream about joining. It's the same with companies. I mean, if you are a person wanting to join and work in our industry, if we are the leader, the people will come to our company. They want to join the best player. That means we will deliver the best customer value. We will get the most loyal customers. We will become the preferred supplier for our customers and eventually we will also have leading margins. And that's why we want to have these niche leaders. And to be clear, we have several of them in the group today. And the ones that are not yet there have a clear path to get there.

So talking about our market, it is a stable market, you know. A truck, in whatever economic circumstance, good times, bad times. The buses need to take the kids to school. The trucks need to pick up the garbage from the restaurants or from the households. The trucks need to keep running. It is a very stable market. Additionally, it's a fragmented market. And what that means is there are yet, I would say, thousands of these successful specialized niche businesses across the Nordics, but also in Europe. And that's our future acquisition targets. So the pathway for us to continue to acquire companies in this industry is big and real.

Here we've broken down our market. So our business starts from when the truck is delivered to the first customer until the end of the lifetime of the truck, when it gets scrapped or out of service. So that time frame is where we are operating. What should also be said is that the age of the vehicle fleets tends to become older and older, and that is, of course, beneficial for us because they need more service, repair and maintenance throughout their lifetime. Also, what can be mentioned here is that even though defense is not a specific focus for us, we have seen an increased demand from the defense sector, making sure that the vehicles are up to shape in the defense sector, and also to make sure that we have availability for maintenance and service and repair should the situation require.

So our new strategy, turning growth into returns. Simply put, this means we have created a large, strong group. We have had very strong growth in terms of sales in the group. Now we're going to make sure that the companies that we have acquired are also reaching their maximum potential when it comes to earnings. Making sure that the margins are following the top line growth, making sure that we take care of the cash that we have in each company. I tell the local managing directors, the cash that you tie up in capital, I would like to use to acquire a new company. So please make sure that you only tie up really what you need to serve your customers. And the rest. Please give me back so that I can put that into other opportunities that create good shareholder value.

So our business model, I was talking about this in the beginning, but it's about acquiring. Well, that means identifying the leading companies, don't pay too much. If we pay too much, we will require strong growth in the company to reach our return on capital financial target. So of course we can pay more, but then we need to make sure that we have that growth. We rather pay a more moderate valuation. And then when the growth comes, we get that on top of the expected return on capital employed. So once we bought the company, we want to support them. We want to make sure that we put the right team around each management team to help the management team reach the full potential, taking the value that they have and deliver that to their customers.

Finally, the reallocation. We want to make sure that we have the cash put in the companies where we get the best bang for the bucks. If we don't see that we are getting enough return from some inventory or some products. We can reduce that product size. We can reduce the amount of the assortment that we have. Free up cash and distribute that elsewhere. Where we get better returns.

So now we're going into the phase of profitable growth with stronger returns. And to be clear, we have had a strong 20% annual growth in the last years since 2019. When it comes to EBITDA. This is a strong number. We are going to continue to have a focus on growing the EBITDA. Some years it will come from acquisitions to a large extent. Some years it will come from organic growth and some years there will be a combination.

Looking at the market here, we put Finland as 1.0. That's kind of the baseline for the size of the markets where we operate. We see that the Nordic countries have similar size to Finland or are a little bit larger in Sweden and Norway. But looking into Europe, you see the sizes. There are plenty of opportunities should we decide to go to Europe for our further growth journey. When it comes to acquisitions, we have done some and the opportunities are out there. When we are ready.

We bought Teirstein in July this year. Tobias, the entrepreneur in Teirstein, was looking for a partner, someone that he could team up with to continue to grow the company and take it outside of Sweden and make it international. Teirstein is the number one brand in Sweden when it comes to vehicle care. Tobias didn't select us because we were paying the highest price. He selected us because he thought we are the best home for him. We are the best partner and that makes me really proud. That is exactly the position that we want to have in this industry when it comes to getting entrepreneurs to choose us. When it's time for them to take the next step, or to have a decrease of their ownership or support for the further growth.

Our new financial targets, it's double-digit growth. As I said, sometimes it will come from acquisitions, mainly. Sometimes it will come from organic growth, mainly. Most of the years there will be a combination of acquired and organic EBITDA growth. The return on capital employed should be above 13%, and the dividend policy is 30% of fully diluted earnings per share.

Our path to stronger value creation. How to get the returns is that we are now building the foundation, making sure that we have all the pieces in place to do the next growth journey in the company. Success. Step by step, we are going to increase the focus on acquisitions. We're going to increase the focus on growth. And our market is big, the opportunities are there. And now we are really getting ready to take this company to the next phase.

Finally, Relais as an investment, I talked about it. Attractive market, attractive companies, great opportunities. Return on capital employed 10.8% in Q2. 13% is a target. That is creation of shareholder value. Kiitos.

Thank you, Christian, and please have a seat over here. All right. And thank you for the presentation. It was very interesting. You have been now CEO for six months, am I right? What has surprised you most about Relais, this company?

Yeah. I've been since January, so it's almost eight months now.

All right.

So I have had the opportunity to meet all our companies, almost all our 1,700 employees. What has struck me is the passion that our companies and employees have for the vehicle aftermarket. They are really passionate about trucks, about vehicles. And this is kind of going through all companies. And then what I've been identifying is that we have had a strong focus on growing the companies, which has been very successful. Now I'm confident that by focusing on the margin, the returns that I talk about all the time.

Next piece, next phase.

Yeah, I see a lot of potential there and really looking forward to unlock that potential together with all the management teams in the coming years.

All right. That's why you are here. Yeah. Yeah.

Christian, just reminding the audience that they can send in some questions, some tricky questions that you will have to answer then. I actually already have some questions. I'll just pick a couple. So the Finns, I don't know if the Swedes are the same, but we love our dividends and Dividend Guy asks, why do you pay dividends? This slows the snowball effect. So the compound effect. So what's your reason for paying them?

I mean, the boring answer, of course, is that the dividend decision sits at the board and the general meeting. But of course, we want to have a combination of paying dividend to the shareholders. I think it's important to have a dividend, but we need to prove that with the cash that we get to reinvest in the business, that we can kind of take care of that cash and have great returns. And once we show that, I'm sure that the shareholders will also give us the opportunity to reinvest the cash flow. So a combination is the best one for a group like ours.

Okay. All right. Maybe one more. Yeah, sure. Okay. Sure. So is asking, you have quite a lot of net debt. So is there any room for a merger and acquisition this year?

The answer on that question is yes, there is room. But the question is more about the priority. Should we prioritize additional acquisitions after having done eight last year and already a few this year. Or should we prioritize the organic growth in the meanwhile, to make sure that we get the benefit out of the companies that we have acquired, the cash out? So in my perspective, the best shareholder value in the short term is to work with our existing companies. So with that said, during the coming years, there will be a combination of acquisition and growth through acquisitions and organic growth. But now is the time for organic growth.

Okay, maybe a little break with mergers and acquisitions then.

Yeah. You shouldn't expect a stop. That's not what we're talking about here. But the pace is going to be lower. And we did the Teirstein in July. So we already did some almost 3 million in EBITDA acquisitions in that one. Okay. Thanks.

All right. Where do you see the biggest potential for Relais today? Is it like acquisitions in Europe later? Or the phase of making more profit, or what is the potential?

I think if we deliver on our financial targets, I think then we are going to create a lot of value for the shareholders. And that means double-digit growth. If we have potential to do organic double digit. And basically there is no need for acquisition for a certain year. So maximize the organic growth and then top up with M&A. And then we should get to about 13% return on capital employed. And that is done not by acquiring companies, but by making sure that the companies we have acquired have a good development. That's when we get to 13% return on capital employed and making sure that we don't use more cash than we need in the company. So to get to that financial target, focus on the current companies is the key.

All right. So you're saying that a lot of value can still be created from the businesses you already own. What would you like to improve first? What can you do with those companies you already have?

Yeah, I think it's company by company. But what I can say is that together with my colleagues, we have put targets on all our companies in the field of EBITDA growth and kind of return on working capital. So that's kind of two common targets across all the companies to make sure that the focus is on these two parameters. And that has unlocked a lot of energy and potential to just focus on really these two items. But then also, I would like to mention the decentralized model where we have had meetings with our MDs and really have clarified that now it's, you are running your business. We are not going to intervene as long as you are performing according to the plans and what we have agreed. It's up to you to run your business. We are here to support you, but you are accountable for the results. Of course as well. And I think that has also released energy in terms of, oh, it's my business, I run it. I just need to make sure that I reach the targets that we set. Of course. So I think that is also a clarification and creates motivation.

Yeah, yeah. Yeah. I could ask.

Another question from the audience. So Competitors is asking how much competition is there for potential merger and acquisition companies. Can you name your competitors in the Finnish market?

There are, of course, competitors. But. So we would like, if possible, we want to avoid competitive processes. You can buy companies by auction processes. We would like to build relationships with the good companies. We know the good companies because we know the industry, we build relationships with them. Eventually they want to sell or they want to divest a part of their shares. Then they should think about us as these guys. I met them. I really like them. They have the stars in the market in their portfolio. So I want to join them. So by doing it that way we can avoid the competition, if you want. I think also by looking at the size of the companies, if we focus on the kind of small mid-sized companies, it's less competition. The private equity normally comes when the company reaches a certain size.

100 million or something like.

That. Yeah, something like that. So we want to also focus on these earlier-stage companies that only we know about. And therefore we have a much better opportunity to acquire them.

Yeah. You have a good playground there.

Yeah. Yes. And at the lower point, like. Yes. Can I ask another one? Yeah, sure. It has to do with this same thing. So some of your peers hold minority interest when doing the mergers and acquisitions, as you already mentioned. What are your thoughts on the minority interests. Like is it a good thing or bad thing?

I think it's a good thing in the right situation. For example, now Tobias has still 30% of the shares. Same was in Matra with Glenn. He also kept some 30%. So it creates a joint interest among us, Relais and the founder and CEO of the company to have the same targets, get the same benefits of improving the company. So from that sense, I think it's great. So yeah, I'm happy to do those type of models. Sometimes acquiring 100% is the better option because of the situation, right? So we have to be situation flexible. But I think it's an interesting way of doing it.

Okay. So they have the freedom of choice, freedom of choice. Either to keep.

You can say that it's a discussion with. In every acquisition, whether it should be, in what way it should be done. So yeah, we need to find the setup that works for the entrepreneur and keeps them motivated. Okay.

But as you are a very attractive football team, you get good price. But at the same time, you mentioned that you want only the best players, niche players. It's always expensive. So you are a very good negotiator. Am I right?

Of course the best companies don't come with discounts. That's for. Sure. Yeah, yeah. But I rather buy a great company at the one-notch higher multiple than buying a turnaround company that I will put a lot of my management's time on, and I might be successful or not. Our model is to get in the best companies, have the motivated entrepreneurs to continue to run the business. So, I mean, if we are coming in at an earlier stage, when they still haven't done everything and there are still opportunities where we can help them. We can get partnerships without this big competition, is my view.

All right, all right, let's jump back to the 13%. Is it a number that investors should remember, like retail investors? It's your target and what needs to happen to get above that.

Yeah. Everyone. Yes, of course the investors should remember that one.

Yeah.

Because reaching that one is, I think, going to be very beneficial for the shareholders. The way to get there is quite simple. It's first of all not overpaying when you acquire a company.

Yeah.

Because the higher multiple, the higher the growth needs to be to get to above 13%. But then onboarding the companies that we have acquired last year, making sure that we help them in any way we can, we put challenging targets and help them, working with them to make sure that the EBITDA is continuing to improve and increase. Mhm. If you pay five times for a company, we will get above 13% even with having a flat development in the coming years. But if we would pay eight times. We need to have growth in the coming years to reach that target. So it's simply to make sure that we have a good development and not keeping cash in the companies that is really not needed. And be very careful about lazy money. And it's easy to say, but all our MDs should challenge themselves in, do I really need this? Can I reduce the stock a little bit without harming the customers? So it's always, I think, opportunities and improvement potential in that area.

Balancing things.

It's a balancing.

Act. Yeah, yeah.

And you also talk about working capital management and maybe lower inventories and better receivables, and how much more can you improve cash flow in this area?

We have had a record high cash flow from operations last quarter.

First half. First half. First half.

Of 26. So it's satisfactory to see that the focus is paying off. But that was a cash conversion of some 100% in Q2. So that's not sustainable. You know, to have 100% cash conversion. But I think there is some more room to do this kind of one-off adjustment or whatever to have this initial effect. But then over time, we should run all our companies on high return figures. So there are more opportunities. And this is something we will focus on next quarter, next year, the year after that, in the whole future. So to say. So.

Yeah.

Thank you very much.