AcadeMedia AB

STO:ACAD

Earnings Call Transcript 2019-Q2

[Operator]

Ladies and gentlemen, welcome to the AcadeMedia Q2 Report. Today, I am pleased to present CEO, Marcus Strömberg; and CFO, Eola Änggård Runsten. [Operator Instructions] Speakers, please begin your meeting.

[Marcus Strömberg, President & CEO]

So good morning, everybody. Marcus Strömberg and Eola Änggård Runsten here, and we are going to take you through our quarter 2 report, and I will start at once with Page #3.And as you all know, this is not a quarter where we start a lot of schools, but it's very important to follow the development in the school segment, how is the cost developing and what is happening overall. And we must say that this second quarter, the development in the schools segment has been quite satisfying, especially we see a good development in the Upper Secondary quarter.As you maybe know, the demographic development is strong. Last year, we made the acquisition of Vindora and focused on vocational training. And the overall development is very strong in this segment, and we are also preparing for growth. So we are looking at a lot of different buildings and new starts the coming year and the coming years.Our problem is, as we will talk more about later on, is the developments in the Adult Education and especially the labor market programs. But we have a specific section about that, and I will talk a little bit more about the development in the Adult segment then. Just to mention one positive thing is that we reported yesterday that we have won a lot of new contracts at vocational training program, and that is an important part of the transformation of the Adult Education that we are working with for the moment because Adult Education will be an important part of AcadeMedia even if the labor market programs will have a weaker and smaller part of our business.And one more thing, just to update you, and maybe you know about that, that is the government situation in Sweden and, in fact, also in Norway because in Norway, we now have a stable right-wing government and majority government. And we think that, that is positive for private kindergarten or barnehage as we call it in Norway.And also in Sweden now, there is called January agreement. It's also stable for us. And the profit regulation has been taken away, and we think it will be more positive for the private actors overall. And we also have a situation in the major cities in Sweden, but that is Stockholm, Gothenburg and Malmö. And we will have a more right-wing majority also in these cities, and that is also positive for us.And as we also see, we see that some of the municipalities also paying us for the deficit that they have in their accounts. So we think that the development towards better vouchers is also -- has also started, and that is what we see in some reports in this quarter. But Eola will bring you through the figures, then I will comment a little bit more when we come through to the Adult Education.

[Eola Änggård Runsten, Chief Financial Officer]

Yes. Hello, good morning, everyone. I will flip past Page 4 and go straight to Page 5 to start talking about the key financial highlights of the second quarter.As you have seen, we have strong volume growth in all our school segments, and they grew with a total of 8.8%. And this is partially due to the Vindora acquisition that's still affecting our numbers somewhat in Q2, but it's also a strong underlying organic growth.And looking at net sales growth, this is a total of 9.3%. And breaking it down into organic sales growth, organic sales growth is 4.5%, and that is net of the decline in the Adult Education. And as I said, the acquisition of Vindora and KTS, a smaller acquisition in Germany, is somewhat affecting the total number. Looking at adjusted EBIT, we actually have a stable or improving development in all the school segments. But as Marcus mentioned, it's the Adult Education segment which is hampering our numbers in comparison to last year. So in aggregate, we actually have a drop in EBIT compared to last year, and this is due to Adult Education. It's largely -- the drop in Adult is largely compensated by the Upper Secondary School, which is much stronger but not fully.We also had a strong cash flow in the second quarter, which is seasonal effect, but also we had a strong development of our net working capital. And as you probably have noted, we have some items affecting comparability in the quarter. We have a positive item of SEK 10 million retroactive revenue from a municipality just outside Stockholm, which is positive, and we also have further contract deficit in Adult Education, which we'll speak more about.So flipping again -- flipping forward to Page 6 then, showing an EBIT bridge then compared to last year. Here, you can see quite clearly how sort of we have a substantial drop in Adult Education compared to the prior year. And we will remember, if you were with us at the time, that last year at this time, we were going very strong in some of our strong contracts for the National Employment Agency, and these contracts terminated in January of '18. So we were still doing very well in Adult last year, and therefore, the drop is substantial. However, it's very rewarding to see that Upper Secondary School is doing very well.So moving on then to Page 7. Looking at AcadeMedia on a rolling 12-month basis, we're still at all-time high, thanks to acquisitions and volume growth. And Upper Secondary School is, as you understand, the main contributor. However, the earnings and margins are negatively affected by the decline in the Adult Education segment.And with that, we will move into commenting each of the business segments. And we are then on Page 8 and start off with the Pre- and Compulsory School segment in Sweden. Here, we see a good development of the number of students. You can see that we had a volume growth of 3.2% compared to last year, and this is really organic growth. We had a small bolt-on acquisition that affects the numbers somewhat, but we have a stable, a very solid, I would say, sort of base underlying growth where we've improved the number of students in our existing units and also start -- have a potential to start some new units. In net sales, translating into net sales, when you also have the voucher increase effect on top of the volumes, we have a net sales increase of 6.6%. And EBIT margin is largely in line with last year. Just a reminder, though, that Q2 is still sort of quite a relatively small quarter in the full year. So I would say sort of EBIT and EBIT margin largely in line with last year. We are still following closely the staff cost and how the wage inflation is affecting our numbers in relation to the compensation, the voucher increases we received. We do see some positive effects of lower staff turnover and also somewhat subsiding wage inflation. But we still feel that the voucher increases that we saw in 2018 don't fully reflect the cost increases that we're experiencing in the market.I can just take the opportunity perhaps to also comment the preliminary voucher increases for 2019, which we published in the report now, we will give a more detailed account of that within the next months in a press release. But the preliminary numbers show a decent increase of, on average, 2.5% in Sweden.You may also have noted that this period in Pre- and Compulsory segment is affected by some items affecting comparability. We're actually closing one unit by the summer of 2019, and this will have a negative effect -- had a negative effect on items affecting comparability of SEK 6 million in the quarter. That means we have no further -- we expect no further expenses from this closure up until the closure is fulfilled in the summer.On a positive note, we have a retroactive revenue from prior years from the municipality of Nacka, just outside Stockholm, a total of SEK 10 million. So as Marcus said, some of the municipalities are now paying up for their deficits in the past. And we -- as I have said on prior calls, we are stepping up our activity within the equal terms area and working on several different levels to reinforce this work and really ensure that we are fairly compensated.We'll move on to Page 9 then and the Upper Secondary School segment in Sweden. Here, we saw student numbers increasing by almost 13%. And you will remember that the Vindora acquisition was completed in the 1st of November last year. That means that there's only 1 month difference in between how much Vindora is included this quarter compared to last quarter. So there's only 1 month there -- the effect on volume numbers and revenue numbers is only 1 month out of 3. So there's a strong underlying growth also in the existing units is my point. And net sales increased almost 20% compared to same quarter last year.Adjusted EBIT margin is looking very strong with a 2 percentage point increase compared to the corresponding quarter last year. I will, however, give a little bit of caution on this because again, Q2 is -- it's 1 quarter out of a year. It's not perhaps the strongest quarter and also can be affected by timing of some kinds of costs, for instance, marketing costs for the upcoming school year. So a little bit of caution on extrapolating that number is due. Overall, we're very happy with the financial performance of the Vindora acquisition. I think it's fair to say that it has met our expectations financially, and we're now more or less completed with the integration efforts that we've made. If there's one area we feel we haven't really achieved what we wanted is the area of the actual quality in these schools. We know that the prior owner perhaps didn't have the same ambition level as we have in respect to quality, and there's more to be done here. And we do expect the Schools Inspectorate to find some flaws when they conduct their audit during the coming year. But we are working hard to address these matters.And with that, I think it's time to hand over to Marcus again, who will give you a little bit more of an in-depth overview of the Adult Education segment.

[Marcus Strömberg, President & CEO]

So as you know, the Adult Education is an important part of our profit and also our development. And in fact, AcadeMedia is the market leader in all the different markets. And we'll just update you a little bit how is the market developing for the moment. And then we look at this picture that is called Adult Education market development.

[Eola Änggård Runsten, Chief Financial Officer]

I think it's Page 10.

[Marcus Strömberg, President & CEO]

Page 10. And one important thing is, of course, what the driver in Adult Education is the number of asylum seekers. It was a big group coming to Sweden in 2015, and these people went into some of our vocational program. They are now coming into the municipality training program and the vocational program. So they are moving in our system, you can say.But as you see, the numbers is much less the coming years. But I will just make one remark, and that is the number of family immigration because the new government is more open-minded to relatives, family immigration. So my personal view is that we will see a wave, one more wave of more people coming to Sweden, and they will also need training.And our Adult Education is standing on 3 different markets: it's the municipalities, the higher vocational education and the labor market programs. And if we look back, the labor market programs has been important, and the labor market agency had been one important part of our whole business. But what we see now is that the municipalities, what we call Komvux, and the higher vocational education will be much more important.And maybe it's strange to say this, but in fact, we have all-time high of number of students in our Adult Education. The problem is that we have all-time low in the labor market programs. So the situation now with the labor market agency is that they have a lot of internal organization problem. The budgets have been taken down by the government. We have the contracts. We have the school. We have a lot of people that should work with the programs, but they don't send us any students. So we have a lot of deficits and loss in the labor market programs, but the development in the municipality Komvux program and the higher vocational education program is, in fact, developing quite good.And as you can see in this picture, the government and the municipalities will invest a lot in this new sort of program. So the situation now is that we are in a transforming phase. We are losing money in the labor market programs. We are taking down costs. We are now focusing on -- to take this to breakeven, and that is our main focus. And we will try to keep up the good development that we have in the municipality program and the higher vocational education.And as you can see, when it comes to higher vocational education, the growth of the market will be really strong the coming year. And as you saw that we announced yesterday, we are the #1 actor in that specific market. But of course, this whole situation with the labor market program and the labor market agency affects the results in this quarter a lot, and it will keep on affecting the results also in the next quarter.Should I say something about the figures or you?

[Eola Änggård Runsten, Chief Financial Officer]

Yes. Yes, sure, do you want me...

[Marcus Strömberg, President & CEO]

You can take the figures.

[Eola Änggård Runsten, Chief Financial Officer]

Okay. So then we are on Page 11 and just commenting on the actual financial development in the quarter. As Marcus said, this is strongly affected by the downturn and decline in the business relating to the employment training programs and the Public Employment Agency. So while our areas in municipality training and higher vocational training are actually outperforming last year, we have a severe decline in some of the new contracts within the business for the Public Employment Agency.And those of you who've been with us for some time know that we have 2 key contracts: Vocational Swedish, which started about 1 year ago; and then the Vocational and Preparatory Modules, which started sort of in the middle of last year. And unfortunately, the volumes in these contracts are not at all at the level we expected and planned for in conjunction with the tender. And therefore, we don't have the synergies and the capacity utilization that we expected. And the fact that these are at a substantially lower price levels than the prior contracts is thus hurting our EBIT very substantially. And therefore, we have realized that the Vocational and Preparatory Modules will actually be loss-making, and therefore, we have taken an expense with regard to this future loss in the period.However, as Marcus said, we are positive with regards to our position in this market. But it's fair to say that there is a substantial amount of turbulence in the area of the Public Employment Agency and the business related to employment-related training.

[Marcus Strömberg, President & CEO]

Maybe I should mark out one more thing because the new government is also saying that they will use more private actors in the future, so they are positive to work with organization like AcadeMedia and our different brands. But for the moment, they are reorganizing. And we are waiting for that, so we are taking down costs and working a lot with that for the moment.

[Eola Änggård Runsten, Chief Financial Officer]

Yes. So in summary, we're intensifying our efforts to restructure the Adult Education and preparing ourselves for the future. With that, I suggest we turn to Page 12, the Preschool International segment. And here, we've got used to very strong volume growth numbers. We're increasing substantially almost 14%. We have the smaller acquisition in Germany of KTS, which has improved the numbers, but underlying organic growth is 8.6% volume. And this brings us to a substantial increase in net sales. And when it comes to the EBIT level, this is underlying largely in line with last year, but somewhat affected by the higher expansion rate -- the high expansion rate in Germany as well as higher pension costs in Norway.Let's move on then to Page 13 and a short comment on the financial position of AcadeMedia. We had a strong cash flow in the second quarter, both seasonally relating to the business, but also strong development of net working capital compared to the first quarter. And this impacted our cash flow, net debt and leverage ratio in a positive way. So at the end of Q2, our leverage ratio is 2.7, which is an improvement compared to Q1, albeit somewhat higher than last year. And you remember our own financial target is to be below 3.0, which is fine, and we have substantial headroom to our covenants with the bank.So just to sum up on Page 14. This just shows you how we are in relation to our financial targets. And these figures compare the second quarter on a rolling 12-month basis with the full year of last year. So growth, of course, is hampered and the profitability is hampered by the development in the Adult Education segment, but we hope to compensate as best we can with the stable school segment. And capital structure, as I said, is in line with target.And with that, we have completed the run-through of the quarter and hand over for questions.

[Operator]

[Operator Instructions] The first question is from the line of Karl-Johan Bonnevier from DNB Markets.

[Karl-Johan Bonnevier]

A couple of questions, if I may. First off, starting obviously with Adult Education. You implied that you are -- the first target for you is really to eliminate the losses in the labor market programs. How do you see that coming into the numbers? Is it something that will burden both Q3, Q4 and into next fiscal year? Or is it something that you can basically close out during this year?

[Marcus Strömberg, President & CEO]

Our focus is to close it down this year, I mean the AcadeMedia year. So -- but these things can happen very quickly when it comes to the labor market agency, but we used to make a lot of money. For the moment, we are losing money, and we are trying to make that breakeven. And our focus is to bring it to breakeven during Q3 and Q4. But we had a very positive development in our other different 2 parts, and we are taking down cost. But that is what we are focusing on for the moment.

[Karl-Johan Bonnevier]

And when you look at how that mix looked in, say, now in Q1, Q2 of your fiscal year, do you see the loss levels already now coming down substantially related to the labor market programs? Or are we at the same kind of levels, so to say, in Q2 as we were in Q1?

[Marcus Strömberg, President & CEO]

We don't give any forecast. But as we said before, when we came into Q2, the losses is -- we are taking down the losses when it comes to the labor market program. And we also take this extra SEK 15 million in Q2 also to make the situation a little bit better to give us more headroom when it comes to Q3 and Q4. But we must be very clear when it comes to the labor market programs. There's a lot of problem at the labor market agency. They are reorganization -- they are reorganizing their organization. They don't send any students. The government takes down their budget. So we don't think that they will send a lot of more students in the coming months. That is what are we -- what we expect. But in the municipality and the vocational program, we have all-time high records of number of students for the moment, but the problem is the labor market programs.

[Karl-Johan Bonnevier]

And when you look at, say, you having been able then to eliminate the losses related to the labor market programs, and as your slide shows, the view for the rest of the business is very good, what kind of margin mix would you have then? I guess, your old target of getting back to 9% to 11% margins with that kind of operating mix still, with the labor market units just being breakeven, would be hard to get up to those margin levels, I guess?

[Marcus Strömberg, President & CEO]

That depends on the revenue or the labor market programs because it's a mixture. And the revenue will be -- will come down substantially if they don't send any students. So if we get breakeven and the revenue is not so high, so -- but we have not changed our target in this segment in this quarter. And the profitability, as I said before in the municipality and the vocational program, is in this range. So the question is, how can we take down costs? And can we also adapt the overhead cost in this segment? And that is our overview focus for the moment. And it's always difficult because if you have a lot of students, as we have now, we have all-time high students, and then at the same time, we should take down the cost a lot. So it's a quite difficult situation, but we have taken down the cost in the labor market programs a lot quarter 2, but it's not enough, so we will continue that work.

[Karl-Johan Bonnevier]

And when I look at the quarterly profile as I go from Q1 into Q2 and then now Q2 into Q3, it is the -- your basic loan is low but, say, promising recovery already if I look at the numbers. That's what you see...

[Marcus Strömberg, President & CEO]

If you look at the underlying development in the Adult Education, it's positive in Q2. But when you compare with the quarter last year, that was really, really good and then it was all-time high on the labor market program, and we were on the top levels of all this program. But as you say, the underlying development between Q1 and Q2 is positive even in the labor market programs.

[Karl-Johan Bonnevier]

And looking at the profile going into Q3, that's what I'm trying to allude to, we should expect a continuation of that improvement basically.

[Marcus Strömberg, President & CEO]

Yes.

[Karl-Johan Bonnevier]

But well below the ambitious target of 9% to 11%? Excellent.

[Marcus Strömberg, President & CEO]

Eola is looking strong at me because I shouldn't give any forecast. But we are -- of course, we are working with that. But we -- I don't think I can say too much more than I have already said about the development.

[Karl-Johan Bonnevier]

Excellent. I won't press you on that. Eola, you mentioned that your preliminary accounting of the voucher increase for 2019 was around 2.5% in Sweden. Do you feel that, that is better now, at least balancing the ongoing challenge, so to say, from labor cost inflation?

[Eola Änggård Runsten, Chief Financial Officer]

Well, I -- let me put it this way. It's -- it could have been worse, and it does vary between various segments and obviously, hugely between various municipalities. But overall, we are hopeful. We haven't sort of counted in all the municipalities yet. And in actual fact, the municipalities have been quite delayed in providing us with their voucher notifications for 2019 because also, at the municipal level, the formation of the local municipal government is taking time to be affected, and some of them have actually announced a delay and are continuing with 2018 figures until they have time to redo their numbers and their budgets. But we're hopeful.

[Karl-Johan Bonnevier]

Excellent. So if I say it in this way that at least the challenge shouldn't get worse from now and we are looking at least a stabilizing of it?

[Eola Änggård Runsten, Chief Financial Officer]

You know what, that's also my feeling, and that's why I also commented on the stabilizing staff turnover and wage inflation. We feel that this has subsided somewhat compared to the sort of rat race that was around 2015, '16, or actually post-2015 where the licensing requirement for teachers was enforced and which required a completely different sort of really rat race for these qualified teachers, which drove up salaries substantially. And now they're actually -- salary levels for teachers have outperformed other professions, and we feel that they're now at a decent level that people are not changing jobs only for salary to the extent they did for the last couple of years.

[Marcus Strömberg, President & CEO]

And you can also say that we are working very hard with an equal terms program, and we have a professional organization really looking into the council of municipality, working together with our organization in Sweden, working with international English schools. So I think the municipalities, they are much more aware of that they can't keep on running their business -- their schools with deficits. So that is one positive thing also when it comes to the future. And we are talking about a lot of money and deficit for the moment for the municipalities when we look at their figures.

[Karl-Johan Bonnevier]

And so you now took a charge for closing one of the compulsory schools at the end of this calendar -- of this, let's say, student year, if you should say so. And I also saw that you mentioned now in the presentation that you are doing an overview of your preschool portfolio. How do you feel that the portfolio stands at this time, looking at, say, further maybe closures or changes, moves in the portfolio?

[Marcus Strömberg, President & CEO]

So you can say this compulsory school, it was a quite small school, and we are looking at the mature portfolio that we are running for the moment. So I think the potential now with the compulsory school that they can make organic growth is quite okay. If you look at the preschool, our problem is that we are running preschool in some municipalities with good quality, but the voucher is much too low. And we have spoken to the municipalities and said that if you don't raise the voucher, we will leave our schools. So that's what we are doing for the moment. So we will see if that -- we will sell or we will close down, and we will make changes when it comes to our portfolio in some of these municipalities. Because the voucher is quite okay when it comes to Upper Secondary School, the system is quite transparent and good, and we see a quite positive development when it comes to compulsory school. But the development when it comes to preschool, I think some of the municipalities, they are far out when it comes to the vouchers that they are running their private preschool in. And that is what we really must change, and that's what we are putting some pressure in that discussion for the moment.

[Eola Änggård Runsten, Chief Financial Officer]

And the reason for...

[Karl-Johan Bonnevier]

Excellent. Maybe give some feeling for how many units we are talking about in the preschool portfolio that would -- could be affected by this.

[Eola Änggård Runsten, Chief Financial Officer]

I think we're not making any forecast on this at the time, but we are reviewing the portfolio. What we want to say is we're reviewing the portfolio with regards to profitability, and we will take some measures to those units that are not profitable or we don't feel that they can become profitable through reasonable measures in a reasonable time, we will take measures to discontinue in some way or other.

[Operator]

Next question is from the line of Carina Elmgren from Handelsbanken.

[Carina Elmgren, Research Analyst]

Yes. All my questions was answered, so I do not have any left.

[Operator]

So the next question is from Carolina Elvind from Danske Bank.

[Carolina Elvind, Analyst]

Just one more question on the Adult Education. Could you guide for approximately how much of a loss the loss-making contracts are doing?

[Eola Änggård Runsten, Chief Financial Officer]

No, we don't provide any such figures, I'm afraid.

[Carolina Elvind, Analyst]

You can't say, like, is it SEK 10 million, SEK 20 million, SEK 5 million, whatever?

[Eola Änggård Runsten, Chief Financial Officer]

I'm afraid, no. We've given the information that we want to in the report.

[Operator]

Next question is from the line of Victor Forssell from ABG.

[Victor Forssell, Analyst]

Regarding the margin in Upper Secondary, should we -- just to summarize, should we see the figure of 9.5% more as an outlier and that the rest of the year should end more in line with historical margins? Or how should we interpret this?

[Eola Änggård Runsten, Chief Financial Officer]

So I mean, I think you can look at the full year last year and see there, I think we had 8.5% EBIT margin. And I mean -- so I mean, we're -- the year before, I think we had 8.2%. I mean, obviously, we see that Vindora is boosting our margins. But I think to expect a 2 percentage point increase from 8.5% would be a bit ambitious if you look at the full year.

[Victor Forssell, Analyst]

Yes. And could you perhaps -- is it just Vindora or could you perhaps break down the increasing margin more so that -- if it's more utilization part as well that you could elaborate a bit more on that?

[Eola Änggård Runsten, Chief Financial Officer]

What we've said before is that it's a combination of Vindora and increased capacity utilization in our existing Upper Secondary units. So both are contributing, but it is fair to say that Vindora is running at a substantially higher margin than the old, if you will, Upper Secondary School business. And this is partly due to the fact that there's a different revenue profile in this business. For these type of students that do vocational training, the voucher is higher. And obviously, if you have a higher voucher, there's more room for maneuver in also achieving a good margin. But we've also been very consistent in saying that there are quality challenges in the Vindora business that we need to address, and some of them will affect operational expenses.

[Marcus Strömberg, President & CEO]

But when it comes to this segment, we have now around 10% of all the upper secondary students in the overall market in Sweden. And I think we have also developed the brands -- so we have had an internal transformation program that really has been a success. So we have also some efficiency program that we have been running in the Upper Secondary Schools. So I think we have a quite strong position for the moment. And now also the demographic development is coming, the organization is coming, and we are also trying to, as we say in the report, increase our capacity when it comes to the future. So we are really positioning us for growth and really profitable growth in this segment.

[Victor Forssell, Analyst]

Okay. And lastly on the schools in Germany, how is the development in utilization there during the quarter?

[Marcus Strömberg, President & CEO]

So it has been quite good. We are filling up the preschools quite fast because the demand is very high. And when it comes to the future now, we are planning to start a lot of new preschools. So -- and we have to get a report of how the market is developing. And we thought that the 200,000 would be the maximum, and we thought also that the other actors will build up capacity, but we think that the demand is increasing all the time. So we have a lot of opportunities in Germany, and we will try to keep up the growth and development as fast as possible.

[Operator]

[Operator Instructions] We do have a follow-up from the line of Karl-Johan Bonnevier from DNB Markets.

[Karl-Johan Bonnevier]

Just on your expansion plans for next year, saw that you're now highlighting 3 or 4 more schools in the upper secondary. How does it look in the other segments for expansion next year?

[Marcus Strömberg, President & CEO]

You can say that we have focused on -- to optimize the portfolio when it comes to preschools in Sweden and our organic growth when it comes to compulsory schools. When it comes to upper secondary, we will work with new starts, but we also are expanding some of our schools to take more organic growth in existing schools. And then we will start a lot of new preschools when it comes to in the international plans, so to say. But for the moment, when it comes to compulsory schools, for instance, in Sweden, we are focused on just capacity utilization on existing schools because we would like to see that the vouchers and the staff salary will be more stable. And that is our focus for the moment.

[Eola Änggård Runsten, Chief Financial Officer]

I think it's fair to say that we will see the growth going forward coming mainly from Upper Secondary and Preschool International. That's where the sort of the opening of new units are going to be the fastest and where we're going to add most students organically.

[Marcus Strömberg, President & CEO]

But we also have organic possibilities in our compulsory schools the coming year.

[Karl-Johan Bonnevier]

Excellent. And when you tie that to your CapEx plan, so to say, for next year, particularly looking at, I guess, the International Preschool expansion, is that going to be driving the property parts of your CapEx a lot?

[Eola Änggård Runsten, Chief Financial Officer]

No, I think it will -- that will be sort of in line with prior years. In Germany, we do not regularly own the properties. We rent them, so it's not going to be a large CapEx driver.

[Karl-Johan Bonnevier]

And if you look at the SEK 259 million you spent on CapEx so far this year, how much of that is property-related?

[Eola Änggård Runsten, Chief Financial Officer]

About SEK 100 million.

[Karl-Johan Bonnevier]

About SEK 100 million, excellent. And I also -- you mentioned that the working capital has really just started to turn around again after the strange Q1 you had. Do you feel that there is more release to come there, say, in the normal quarterly pattern that you have traditionally for the rest of the year?

[Eola Änggård Runsten, Chief Financial Officer]

No. I mean, I think we had a rather strange sort of -- Q1 was rather odd because we had a very low starting point but a very large negative working capital of minus, I don't know, SEK 1,200 million or something. So very low starting point. And then we had -- in the other end of this scope for -- at the end of Q1. So I think during this year, when we look at working capital changes in relation to 1st of July, we're going to have that sort of that odd number. The odd starting point in the year is unfortunately going to affect the comparison. I think overall cash flow profile is looking normal throughout the year and will -- cash flow will improve as we go throughout the year, but that's mainly sort of driven by the seasonality of profits.

[Operator]

And there are currently no further questions registered, so I'll hand the call back to the speakers. Please go ahead.

[Marcus Strömberg, President & CEO]

So thank you very much, and we wish you all a good day.

[Eola Änggård Runsten, Chief Financial Officer]

Thank you. Goodbye.

[Operator]

This now concludes your conference call. Thank you all for attending. You may now disconnect your lines.

[Eola Änggård Runsten, Chief Financial Officer]

Thank you.