Embracer Group AB (publ) (EMBRACB) Earnings Call Transcript

Dear shareholders, it's a great pleasure to welcome you all to this year's Annual General Meeting in Embracer Group. And of course, welcome to Karlstad. We have been holding our AGMs here for quite a few years now, 8 to be very specific. Those of you who know me will probably not be surprised that I think this has become a tradition. We are very proud of. It's always special for me to welcome shareholders here in my hometown and in Vermont. So a warm welcome to all of you here today and those joining us online. With that, I hereby declare the meeting open. And standing here in Casa today, it's hard not to think about how much has happened. Since we started this journey. Almost 10 years ago, in November 2016, we listed THQ Nordic. One share costed DKK 20 at the time. I remember standing in the front of our new shareholders. And I said a few things that they one of them was stay tuned a lot has happened since then. Some things went very well. some things didn't. And I could not have predicted most of it. The way we have created value has changed along the way. sometimes by building, sometimes by acquiring sometimes by selling and sometimes by giving a business the freedom to stand on its own. If you bought 1 share in Tesco Nordic at the IPO 2016, that investment today represent ownership in 3 listed companies equaling SEK 270. These 3 are soon to become 4. I also said something else back then. -- that I felt a great responsibility to deliver on the trust of all of our shareholders. And I still do -- and of course, 10 years of experience changes how you look at things. 10 years ago, a lot more opportunities looked interesting. Today, well, far fewer pass that test. The conditions are different today. And when conditions change, you have to change with them. But if experience makes you afraid to act, I'm not sure you have learned the right lesson. But there are still plenty of opportunities for us to create value. So even if fewer opportunities past the test today, there is still plenty to do and not necessarily in the ways we are used to. Some of the biggest games in the world are getting older and staying on the top players don't necessarily always want the new thing. They want more reasons to spend time in the world they already love. And those worlds no longer have to live in 1 place. The book becomes a game, a game becomes a film or TV. A digital world can become a physical experience, even places people travel to visit. I have believed in this for a long time. What is different today is how much more of it we are seeing. A great story doesn't have to belong to one format, a great world can have many doors into it. And then there is AI. I don't think any of us knows exactly where that will take us. So what happens when those boundaries continue to disappear, how do we give people more reasons to stay within the worlds that already, they already love. And perhaps most interestingly, what opportunities have we not thought of yet? At the same time, we are preparing to become 2 different businesses: Embracer and fellowship. And they are different for a reason. Fellowship will have one direction built around some of our strongest IPs, communities and studios. Embracer will be more decentralized with entrepreneurs and businesses following different paths. They will not look the same. And the way they create value will be different. And I believe strongly in both. I could not have predicted most of what happened over the last 10 years. And I certainly won't pretend I can predict the next 10 million, but back 2016, I told our new shareholders something else. I already been in this business for 23 years, back then. And I said I intendedly intended to stay for another 23. So if I count correctly, I still have 13 to go. A lot has changed since then, but that has not changed. So stay tuned. Yes. And with that said, let's move on to the formal business of today's meeting. The second item on the agenda is the election of the share of the meeting. The Nomination Committee has proposed Yang Gulam, our General Counsel. Can the meeting approve the proposal. Thank you. And with that, Ian, I hand over to you to take us through the rest of the meeting.

Thank you, Lars, and thank you all for the confidence First, a few formalities. I would like to ask everyone to just turn off their phones to silent mode. If you haven't already done that due to the live cast -- and the Board of Directors proposes that the meeting is held in English. Can the meeting decide so. Thank you very much. There will also be a Q&A session during the item of presenting the business of the group. And then finally, but not least, just saying that -- there are a lot of guests in the room that has not registered shareholders or notified their participation before the meeting and it's only shareholders, their proxies or their representative in the room that will be able to ask questions during the meeting. We will open up the floor during the Q&A for everyone. But I would like to ask the meeting if this nonregistered shareholders, et cetera, could participate at the meeting. Thank you very much. My colleague here to the right, will keep the minutes. And today, we have the Board here. We have our board with KikivaluLund, Lars Wingefors, Brian Board and our Jacobs there. Cecile's there. Yes, that's all. And Phil Rogers, our CEO, is here as well; Mig, our CFO, as well; and Parfum the Nomination Committee is here as well. Not the list Magnus from PwC is here the company's auditor. Now we move over to Item 3, which is preparation of the voting list. Everyone that has notified the participation in the meeting have been ticked off when they walked into the room. The voting list is here with me if anyone has any questions about it, you're free to come to me after the meeting. To sum up. Today, we have 9 million shares represented an 133,394,375B shares represented in the room. That totals 142 394,375 shares, which corresponds to 223,394,375 votes. This then when it comes to representation in respect to capital on both, 62.22% of the capital is represented today and 72.09% of the votes are represented here in the room today. Can we approve the voting list as presented? Thank you very much. Now we have come to the item #4, which is election of 1 or 2-person cert minutes. We have a proposal that 1 person is to certify the minutes and call nat from Alecta, Senterfitt. I don't see we're up there. Perfect. So I want to ask any other proposals Carl, can you be available afterwards and certify Perfect. Thank you. And can we then appoint Carl as 35 today.

Yes.

Thank you very much. Item #5. question if the meeting has been duly convened. And now I leave over with Athia to tie to present that.

Thank you Okay. So in accordance with the company's Articles of Association, notice to the AGM shall be given by publishing the notice on the company's website and in the Swedish Official Gazette. -- no earlier than 6 weeks and no later than 4 weeks before the meeting is to be held. And at the time of the notice, information of the notice must also be announced in Svenska Dagbladet. So the notice to today's general meeting has been published on the company's website on 24th August 2026 and in the Swedish Official Gazette on 27th of August 2026, and -- and the information of the notice has also been announced in Svenska Dagbladet on 27th August 2026. A -- so we can then state that the notice has been considered to have been made in accordance with legislation and the company's articles of Association.

Thank you, Atea. Then I ask the general meeting if it can consider itself duly convened?

Yes.

Thank you very much. Item #6, which is approval of the agenda. -- has been included in the notice for the meeting. And I would like to ask the meeting if we can approve the proposed agenda.

Yes.

Thank you very much. And now we have Item #7, which is presentation of the business activities, and I would like to welcome Phil to the stage.

Good afternoon, everyone. Our AGM is an important opportunity for us to speak directly to our shareholders. Now Lars has taken us through the past journey I would like to look forward and ask 1 simple question today. And that's what should you expect from us next. For me, it comes down to 3 things. First, that we continue to convert the early signs of underlying improvement into consistent business delivery. Second, that we take the next steps towards value creation through focus and through our focus, we deliver growth. And third, that we show, we truly are built differently. To capture the opportunities ahead. Now these are the 3 areas which Muge and I will cover today. For fiscal '25, '26, the Embracer Group generated net sales of SEK 15.9 billion and an adjusted EBIT of SEK 0.9 billion. It was a year of change and progress particularly within PC console with a quiet major release slate. Now following a stronger Q4, we ended the full year with positive free cash flow. With a positive trend shift in Q1 and into Q2 this year, our goal is to translate our stronger foundation into sustained earnings and free cash flow growth. Now at the heart of this ambition is something quite simple. When we put our great teams behind strong games and franchises understand our audiences and execute well finding them, we can create significant value. Kingdom Come deliverance 2 is the clearest example. Reanimal is another. During the course of fiscal '25, '26, of course, we spun off the Coffee Stain Group. And after the year-end, we announced that we will further evolve in 2 separate companies through Fellowship Entertainment and Embracer. This next step is about creation, focus and growth. Sustainability remains an important part of how we create long-term value and how we run a responsible business. Over the last years, we've strengthened reporting, transparency, governance and implementation across the group. This year, we published our first CSR D aligned sustainability statement. -- for for those like me sometimes, you aren't familiar with in acronyms, but CSRD, corporate sustainability reporting directive. There's always more to do, and we remain committed to that journey as we move towards 2 separate companies. Now business delivery happens with people. And it's early in this part of the AGM and today, but I want to take this moment to thank our teams for their creativity, commitment, resilience, through Europe, both significant change and delivery. Muge?

Thank you, Phil. Hi, everyone. Let's take a look at our financial development in FY '25 26. And then if you'll bear with me, we'll take a closer look at the underlying improvements that we're already seeing in the current financial year. As Phil mentioned, FY '25-'26 was a year with no major PC console releases. It was also a year where we were impacted by divestments and FX impacts, which had a negative impact on a year-on-year comparison. Net sales of SEK 15.9 billion for the year were down 25% on a reported basis from SEK 23.3 billion the year before. Excluding the effects of divestments and FX impacts, however, net sales were only down by 3% on an organic basis. The lack of major PC console releases combined with the year-on-year impact from the sale of Easybrain early FY '24 '25, resulted in a negative mix impact, which we see in the software adjusted EBIT margins. Around half of the 7 points year-on-year in margin can be attributed to the divestment impact of Easybrain. As you know, starting in Q1 FY '26, '27, Cash EBIT was introduced alongside adjusted EBIT as our primary profitability measure. You can already see here the evolution of cash EBIT margins, which follow a similar trend year-on-year to adjusted EBIT. We believe that cash a bit better reflects the economics of game development. and the internal steering of our business. In addition to structural changes through divestments, we continued our focus on cost control and we have created a solid platform for profitable growth and continued cash generation going forward. Turning now to the balance sheet. As we have seen in the last years, we have significantly strengthened our balance sheet position through a combination of spinoffs, divestments and cost control. On the left side of the slide, you have our balance sheet reported at the end of March. While on the right, we can see how this breaks down between operational and financial items. Looking first at the operational items on the top right, total assets of SEK 13.4 billion relate largely to investments in completed or ongoing games development projects, which combined represent SEK 5.8 billion. Other noncurrent assets of SEK 3.1 billion relate primarily to deferred tax assets and property, plant and equipment. Other current assets of SEK 4.1 billion related to working capital assets, all of which around half is trade receivables. On the liability side, other noncurrent liabilities relate primarily to deferred tax and the noncurrent portion of the lease liabilities. While other current liabilities relate primarily to trade payables, accrued expenses and current lease liabilities. In financial items, which you can see bottom right of the slide, total assets of SEK 12.3 billion are primarily related to goodwill and IP rights relating to past acquisitions as well as a net cash position of SEK 3.8 billion, being SEK 5 billion gross cash, less SEK 1.2 billion of debt, which we'll look at in a bit more detail in the next slide. Well, as you can see, thinking back a couple of years, the financial profile of the group has changed significantly through lower development investments, portfolio actions and the reduced cost base, all contributing to a stronger balance sheet position. Looking more specifically at the evolution of our net cash position over the year. As I mentioned earlier, FY '25, '26 was impacted by not having any major PC console releases resulting in a number of quiet quarters. The stronger fourth quarter, however, allowed the group to finish the year with a positive free cash flow. Operating cash flows of SEK 3 billion fully funded our capital expenditures on game development. financial cash flows of minus SEK 1.7 billion included the return of around SEK 500 million to shareholders via our share buyback program. The completion of Captain Group spin-off resulted in a further EUR 500 million outflow. We received SEK 105 million of net proceeds from the divestment of nonstrategic assets. and we paid around SEK 700 million in earnouts related to past acquisitions. We now have a relatively limited cash settled earn-out obligations of SEK 0.5 billion for the coming 5 financial years. In fact, as of today, this is already reduced to SEK 0.2 billion. All of these flows resulted in a net cash position at year-end of SEK 3.8 billion, a strong position that maintains financial flexibility for the group, allowing for further cash returns to shareholders through our ongoing share buyback program. while also preparing the ground for the future spinoff of fellowship entertainment -- as Phil mentioned earlier, Q1 FY '27 has provided an encouraging start with 23% organic growth Cash EBIT has been improved by SEK 146 million year-on-year and the cash flow improved by SEK 386 million year-on-year. These underlying earnings releases are early signs that the stronger foundation is continuing to show through. As mentioned in August, we expect these underlying improvements to carry into Q2. Again, -- this is the trajectory we expected when we set out the direction in May. It is progress in the right direction, but the focus remains on delivering consistently over full year and over time. Now that we've talked about underlying improvements, where does this take us? Let's take a look now at our second topic of the day. On May 28, we announced our intention to spin off fellowship entertainment is a separately listed company. And at that time, we laid out the rationale that you can see here. And here is my color. Over the past 4 months, 1 question has frequently come up. Why do this at all couldn't you just keep reporting as 2 segments. I want to be clear, this is not about creating 2 smaller groups. It is about creating value through greater focus and growth. These businesses have different strengths, different opportunities and increasingly different needs. Separation gives each business a clearer strategy. an equity story, dedicated management, stronger accountability and better conditions to realize its full potential. This is a long-term decision made for long-term value creation. Phil?

Thank you Photo ship Entertainment is being built around some extraordinary worlds. The studios and business teams to bring them to life and deliver results. We know the major IPs, of course, the lot of the rings, the Hobbit, Tom Rado, Kingdom Come Metro, Dead Island, Darksiders and remnant. Embracer has a different opportunity. It is becoming leaner, decentralized ecosystem of established entrepreneurial businesses across games and entertainment. It has strong positions across a number of attractive niches. Now these business have their own identities, audiences and expertise and many have thrived through change. Embracer has a stronger and more focused PC console pipeline with an improved return and profitability outlook today. Now I want to spend a moment on the market we operate in because the backdrop matters. Gaming is the #1 entertainment sector in the world. passing the SEK 200 billion market value milestone for the first time, bigger than film, bigger than recorded music -- and importantly, it's growing. 2025 delivered the strongest growth we've seen since the pandemic years, up 9% year-over-year with PC and mobile, both showing growth in that 11% to 12% range. Further market growth is expected in 2026, up plus 6% year-over-year. One notable driver, of course, is the launch of GTA 6. Now this will be a huge event for the whole entertainment sector, expecting to drive new, lapsed and upgrading gamers into the market in big numbers. Beyond FY '26 or 2026, a CAGR of plus 5% is expected through 2028. Now I don't stand here today and tell you it's an easy market. The industry has gone through real structural change. hardware costs have squeezed the economics across the board. So how do we read this? Well, I'd say 2 things. First, a growing market where consolidating capacity is possible with disciplined operators gaining market share. Second, the trends play to a multi-platform portfolio strategy built on owned and controlled IP, long-tail catalog and core game focus. This is precisely the direction we've taken over the past 2 years. In a nutshell, to face the future. We're not creating 2 smaller versions of the Embracer Group of the past. We're creating 2 focused businesses each built differently for its opportunity. and each with its own way of creating value and capturing the growth that we see. Now built differently does not mean bigger bets, bigger does not automatically mean better. built differently means smarter bets. What matters is that we're putting our best people our capital and creative energy behind franchises and worlds that can live for many years. As described in the May 20 event, worlds that players can return to again and again. About a year ago at an investor meeting some of you likely in that room, we were asked a question why we had not planned more expansions for KCD 2? The answer is simple, and that's what CCDI, was not really set up for that. Of course, we have since announced a new Kingdom Come game for the next financial year, built, of course, on the foundations of Kingdom Come Deliverance 2. However, the deeper answer is yes. When fans want to stay in our world, we should plan to give them more to do there. Now franchise planning is how we improve predictability, not by removing creative risk because that's part of the industry that we're in, but by being deliberate about how we take it. The next point is publishing, and let me use Metro as the backdrop. Again, for those here at Games Commute a few weeks ago, it was really exciting to receive response from fans and press to more details on Metro 2039. Now Metro is a series that have seen consecutive growth for each mainline entry released with the last game exit us exceeding 18 million lifetime unit sales. Now the opportunity now is to activate that fan base for Metro 2039. We're humble but all indications are that we're on the right track. Now we don't see the job of publishing as just getting a game shipped. Publishing today is about finding the right players, reaching them efficiently and staying close to them over time. It's about turning fan and community signals into participation, turning a strong launch into a long relationship. For us, that means being sharper in how we position titles, how we use data and insights and how we support our studios before launch and after. The ambition is not to publish more, it's to publish better, greater reach, stronger execution, more durable outcomes. Now fellowship will work as 1 publisher to do exactly that. Of course, for Embracer, there'll be several publishers each with their own specialisms. What we're saying is that 1 model does not fit all. We're choosing the model that's the right fit for each business to AI. Last year -- for any ones there. I described our approach as pragmatic, perhaps ethical, sustainable. If you recall, AI is the copilot, not the pilot. Our teams own the creative and final product. Well, since then, our best people and teams have pushed that further in practical use. Standing back, of course, the world is loud on AI right now. frontier models, regulation, hyperscalers, Sentient AI. I want to cut through all that and just bring it back to pragmatism. The industry has always embraced new tools, engines, motion capture. Studios picked up what existed, pushed it past its limits. And when it wasn't good enough anymore, they built their own. Every one of these tools that we see was going to change everything and every one of them did when in the hands of talented people. So AI is the next chapter of that story, more tools on the table. Some are already in use across the group and where they work, they do the work that every good tool does. -- take away the slow repetitive work, enabling faster prototyping, fast testing ideas and many more things. What it does not do is replace judgment or the craft of making great games. What makes a game worth playing is still decided by people who understand players and fans, that is why we're deliberate today about where AI goes and where it does not. So the opportunity is simple. Use these tools where they make sense and our teams get time back for the work only they can do. That is the whole thesis, better tools in the hands of talented people. Now let me close. We've spent the past years creating a stronger foundation. We've simplified the group. We strengthened the balance sheet and we've sharpened our focus and clarified the path ahead. But ultimately, our success will be measured by what we deliver. So what should you expect from us now until the next AGM. Well, it comes down to the same 3 things. First, that we continue to deliver on the early signs of underlying improvement, stronger cash earnings, consistent execution and further momentum in our portfolio. Second is that the current year shows that greater focus translates into longer-term growth and value creation. Now the industry keeps changing, the answer is not to chase every opportunity. It's to know where we genuinely are stronger and go deeper and faster there. Third, that everyone is clear inside and outside the group that we are, in fact, built differently to capture the opportunities for the next decade and beyond to Lars' point. For me, the upcoming quarterly reports, CMD and the spin-offs are the key milestones on that journey, and we'll take that journey step-by-step. Now it's time to build on our momentum for our players and fans for our businesses and for our people and, of course, for our shareholders. And with that, I would like to leave you with a glimpse of what ultimately, it all comes down to the games. Some already in the hands of players, others still to come. Thank you.

Well, great. Yes. So now I'll kick off the Q&A. My name is Jacob Betler. I'm an equity analyst with Danske Bank in Stockholm, and I'll be moderating the Q&A I think I'll start with a few questions on my own. Then I'll ask the audience if there are any questions, and there will be a microphone that will be handed out. and then we'll end with some webcast questions. And thank you so much for having me to start with, and thank you for the presentation. I'll start with 1 question. I mean -- and maybe this to you, Lars. You've already completed 2 spin-offs with Coffeestene and ASMD. What learnings have you are you taking with you heading into the fellowship spin-off in calendar '27?

No, I think the overall learning is the strategy we put forward worked. I think it's a greater focus, both within Asmodee and coffees. I'm very happy with that performance. So obviously, there is, I don't know, minor details like to shareholders some backflow of capital if you go in the minor market, for example. But over time, that will correct itself.

Good. And then just a question, Mig, was talking about fortunate net cash position you have currently, I believe, as of the last report, SEK 3.4 billion. How should we think about the kind of net cash composition for the separate units looking forward. I mean on the 1 end, you have fellowship, which already today has solid margins and a good trajectory looking forward. On the other hand, a bit obviously, higher CapEx to sales and then in Embracer, a bit lower margins, but a bit more CapEx light in relation to sales. So if I can just dig a few thoughts on that.

Well, we'll be following a very similar process as the one we proceed in the -- in our last spin-off. So we identify an SSR balance sheet needs in a dynamic manner as part of the upcoming spin-off, obviously, the balance sheet needs and the strategic needs for both fellowship and Embracer are to be confirmed -- we're in a position of strength of sitting on net cash. But obviously, as we try to communicate today, we're after healthy businesses, which are cash flow positive. So the idea is to leave enough cash for both businesses and then return any excess cash to shareholders like our ongoing share buyback program as a mindset.

Good. And then I think you would be we have to talk about the pipeline right and Metro. It's the title that has reached in the fastest pace in your history, 1 million wish lists. We're also seeing really good trends in Tureder, legacy of Atlantis. A lot of excitement on Gamescom as well -- so maybe you can talk a bit about what you're seeing there.

Yes, we're really excited by it. I mean, for the teams themselves, there's always sort of a sort of a big event sort of nervousness on when people get their hands on finally or you show more, but that's why these events are so good because the games come hundreds of thousands of players. The lines were incredible. I think for us, because the whole business, it really is a massive sort of galvanizing force and energy -- so we're really excited. I mean the good news now, we do get a lot of data in terms of how much viewership we get, how much wish lists we track to and we can trend that against other launches. So as I said in the notes, we know there's a player base for Metro. It's a big fantasy. It's a great mechanic. It's a world that people want to play in and the same with tumorator. So finding those fans and players around the world is now the stage that we're at, and we're encouraged. So lots more to do, of course, but we're excited.

Good. I'll sneak in one question before I'll ask the floor as well. But when it comes to fellowship, you've talked about having one of the strongest pipelines in the industry. and that you think it will support kind of above industry growth for the coming years. And you've also talked about an aspiration for kind of industry-leading margins in that business. Could you give us some color on what you define as kind of industry-leading and also what you think in terms of the vague time line for when this could be achieved.

That was your quote. Yes. But I'll start with that. I mean -- but I'll be kind of vague and clear probably an equal measure. I really believe in understanding the margin structure in games today, it comes back to our cash EBIT drive. We want people in the business understanding why -- of course, for accounting point of view, we capitalize everything, but we're responsible for that in terms of how we report and measure because we know we're investing significantly. But we understand then the margin structures that ultimately we should be -- we're getting to. If I go back to past years thinking about margin structure, the 20%, 30% north of that. The -- that's a sort of play that we want to feel we're heading to, and we've got the organization that's at the right size and shape to support that. But to my point, it's not about publishing more, sometimes business is set up, and they just end up publishing a lot to maintain that overhead. That's a different approach. I think that's what the world now will hopefully see as we roll this forward. But I think key message here, it's a target that we want the whole business to really sort of own and embrace -- it's important for that. It was your letter.

Well, I don't know where that exactly come from. But obviously, it's different things. It's the return of investment of our games development, which is a significant chunk. And then there is the whole catalog. And then on top of that, we have our life business, yes. So these 3 things, obviously, are very important part. I'm sure there is analysts that will do that work when the time comes.

Yes. For sure. I could sneak in 1 question there. Sorry, Audience, if you're really eager to ask one. But it was a nice segue because you've also talked about expanding that licensing business from moving from not solely being focused on Lord Rings and TomReder. Can you elaborate a bit more about that opportunity?

Well, I can. I mean it's early stage, but it's a very clear direction. -- we see a lot of opportunities in inbound interest. What about this IP, what about that IP? And we're really interested in those discussions. We're not the the mask is everything. We don't have the monopoly of wisdom on every single game and where we can partner and license out. These are great things for us across the transmitter side, but on games themselves. So I think actually this is an evolution today in the gaming space. that people come to you. They're very famous teams often, but they've got treatments. And it's happened in other media. And I think now we're seeing it begin to happen in games. So putting that into 1 clear structure for us, is our intent, and that's our ambition.

Good. Do we have any questions in the audience currently? There is a question.

Yes. What skills or competencies will be most important to attract to the company and how do you work with remaining an attractive employer?

It's a great question. I mean there's a lot of technical competencies that are fast-changing and arguably some of these technical competencies today, in 1, 2 years of process with the progress of change could become less clear. So I guess I come back to some fundamental things of the sort of skills we want. We want people with acquiring mines. We want teamwork. We want great communicators, some really core aspects there, problem solvers. There's a reference that changes about AI and I know there's so much written about it. And the meter headlines are at a very interesting level. But when it comes down to people doing their jobs today, we want people to lean in, we want people who do have the confidence in what they can create and adopt tools that can make that faster. It exposes people as well, but we want people who have that confidence. And I think that's generally, I think, where we're going. And I think with with the way we're now talking about ourselves and we believe in ourselves, I think we will be an attractive place for people to come and join, let's see.

We have a couple of questions from the webcast as well. We'll squeeze in 1 or 2 here. But one question is on -- you have a goal of 2 major games with full economics starting next fiscal year and going forward. The question is, does that include the partner-funded titles like Tomb Raider -- and what specific titles do you have in the pipeline for fiscal '28-29, and '29-30.

Well, we couldn't hold all those -- so I think full economics is quite clear, if I'm honest, I think people generally understand that. I mean 2 matter working with our partners at Amazon that wouldn't be counted within that. we're not going to get into game-specific titles now or specific titles for how we see it. But we do believe in the 2, that's the rhythm we're looking for. And we have confidence that we can deliver to that.

Yes. And then just 1 question we had was on the strategy for Embracer and maybe the margin levers you can pull there because I believe you have double-digit margins in mobile you have single-digit margins in entertainment and services, whilst there's been a bit lower margins within PC console in that remaining business. You've done cost actions within this area. But what do you think is the main lever to pull ahead? Is it continuing cost savings and potentially divestments? Or is it a top line question or a combination?

Well, again, the answer is always disappointing. It's probably a combination of both, right? We always believe that. I mean, in some cases, the top line growth is very clear that this consolidation we talked about some of our niches are very sizable. When we talk about the specialisms we have in the distribution side right now, I think that will allow us to grow, and that will drive accretive business to us. So I think we've got a number of factors really. And that's really plays to that decentralized because they're all quite unique and they've all got their own opportunities there to work forward with. Very good. I think we will wrap it up there and continue with the agenda. Did you have a last question sorry, we had the last question here.

Sorry. Just a final additional question. Phil, you mentioned in the presentation your sort of continued commitment to sustainability, and I realize this might be a bit too soon to ask, but I was just curious to -- if you could sort of share any additional thoughts on how you expect your overall sustainability ambitions to evolve once the spin-off is completed? And my name is Eric Ransom. I represent Folksam the Swedish insurance and pension provider.

Yes. So I'd say there's 2 answers to the 2 aspects of that answer. One is that I think we've got a great framework when I look at the detail we report and work to and govern, we really have set up the structures here to help us to do the right thing. So I think in some ways, that's going to be a -- is it a copy pace, but that is now sort of DNA, I think that we can take into both sides of the business as we conclude the spinout. I'd say the second thing is the ambitions won't change. And I'd say that really, when you walk around the group, and we're a very international group, but everybody is interested in sustainability. There's not a person you got to -- so who cares. It's on everyone's agenda, how do we help -- so I think that's -- that gives us comfort that the ambition that we take, we will realize.

Good. Thank you, guys.

You can walk down from the stage if you want -- thanks a lot. Continuing Item 8, that's the presentation of the annual report, et cetera. For the report for the financial year has been available at the company's website the 18th of June this year. Available here in the room today with me, some of you have probably picked it up as well. It's been available at the company since then as well. Any questions? -- on the report. Can't see any hands. Then I would like to welcome Magnus, the company's main responsible auditor to the stage. Thank you.