Saab AB (publ)

Hello and welcome everybody to Saab's Q4 and Full Year Results Presentation. I'm Merton Kaplan, Head of Investor Relations.

With me here today in Stockholm, I have our CEO, Micael Johansson, and our CFO Magnus Örnberg. We'll start with the presentation, and then follow on with a Q&A session where we will take questions from the telecom conference, and then we will take questions from the web from our audience online.

And please don't forget to post questions under the video section on the website. With that, I'll leave the word to you, Micael.

Thank you, Merton and thanks for joining in listening or watching us today. This is my first report as a CEO and I look forward to - I assume all the questions I will have.

But first of all, let me give you a short flavor of 2019 and Q4. I think we had an excellent year 2019.

We are following our plan. We had so many important milestones that we met during 2019 in terms of execution of our programmes.

We have been growing now continuously for the last five years. So we are on the right track here in our growth journey.

We see continuous improvements in the foundation of our business, the small orders they have grown 10% during 2019. And also, we have continuously a great order backlog supporting our future growth.

When it comes to earnings and profitability, this is probably the best year in absolute numbers in terms of profitability and EBIT. We grew 15% year-on-year when it comes to EBIT and we reached 8.3%, which I'm really pleased with.

We have had during the year more even execution of our milestones and activity level and delivered in several business areas according to plan supporting this growth and also the profitability and performance. And we have been working also with efficiency in our organization, looking at our portfolio, being more sharpened and that one reducing a bit in what we offer into the marketplace and taking away things that are sort of at the back-tail of lifecycle, that's continuing.

And also, we improved a lot when it comes to cash flow from last year from 2018. And we had tremendous a strong quarter for when it comes to cash flow more than 3 billion in operational cash flow.

As I said, milestones have been great in many programmes. The Gripen E programmes has delivered many important milestones.

As you've seen, we had deliveries towards Brazil and also Sweden in the later part of the year. We had an important announcement also in Q4 on the GlobalEye.

We met milestones in that programme and we are approaching delivery of the GlobalEye and it's also interesting to see that UAE have decided to acquire a couple more GlobalEye's which was announced in November and we are continuously working that contract to finalize it. And also, we've started a production of the T-X which is now called T-7A the trainer aircraft that we successfully won in the U.S.

with Boeing. We started production in Linköping in Sweden and we're building a facility then for the coming production in West Lafayette, Indiana.

So it's been an intensive year with many, many important milestones and I'm looking forward to 2020. Marketwise, we had a good year, we had a stable order intake - a few highlights here I think Finland and the win on the Squadron 2020, which is the Finnish Navy's corvette programme is an important one with both the combat management system, and also sensor technology and sensor products on that ship, extremely important to us.

We did win a number of framework contracts on our advanced weapon systems the Carl-Gustaf and AT4 both in the U.S. and Sweden.

We have an important long-term programme in the U.S. called G/ATOR Ground/Air Task Oriented Radar, where we go into production phase now and this will go on for a decade probably.

So that's another sort of important production phase. We've done a number of support contracts wins on the airborne early warning side.

And we as I said, the UAE decided to order another two aircrafts on the GlobalEye. In Germany, we had a really good thing happening in the later part of the year winning a training contract for the German Army which will go on for many years.

And also that will mean that we will have more employees in Germany going forward. And not the least, and we were successfully down selected in - on the submarine side in the Netherlands, together with the German TKMS and also the Navy Group from France.

So that will continue to be a competition but we are part of that competition going forward and that's really pleasing to me. Looking at the financial highlights than starting with a full year, the order bookings were on par with 2018 without any substantial mega-deals.

We're working a number of those in the market, of course as we speak, but the sort of the smaller orders and the medium sized orders are continuing to develop really well. We had good growth 7% and 6% organically over the year.

And we improved as I said, the operating income to very high level the highest ever in absolute numbers and we are on the right journey towards our long-term goal of 10%. And not the least important improved our cash flow substantially, and as we've talked about before, we started now to show that in Q4 we got more than 3 billion operational cash flow so, we are really on the right track with cash flow as well.

And that, of course comes down to the quarter then where we had, I think, very strong quarter four. And I think you have to view it in light of the activity level over 2019 which has been more even.

So our Q1 to Q3, 2019 was sort of different from 2018, better growth during those quarters, better profitability, and still a strong Q4 this time in 2019 on par with 2018. So I'm really pleased with the quarter as well, with the order bookings, and also with the sales level, which is on par with last year, and also the operating income more than 11% in the Q4, and especially on the cash flow side of it, where we managed to get more than 3 billion in operational cash flow.

We have as I said, been on a continuous growth journey, and it's shown on the slide. And we've grown more than 50% actually over the last five years.

And I see no reason to sort of abandon that growth journey. I think we have a great backlog supporting that and we have a high activity level in the marketplace.

The sort of the market position, I think is improving all the time, both on product level and on system level. So, I think we have good opportunities now to continue our growth journey.

So I just want to reconfirm our long-term targets. I think we will look at - still we remain to grow 5% per year over a business cycle.

And we will continue our journey towards our long-term target of 10% over a business cycle, and our equity asset ratio remains target wise at 30%. So we are reiterating our long-term targets as we speak.

That leads to my view of the outlook for 2020. As I have said, we will continue to grow and we will be in line with our long-term target.

On that side, we have a backlog supporting that and we have a great market activity. And I see that we will improve our operating margin compared to 2019 and still continuing our journey towards our 10% target as a long-term target.

Finally, before I hand over to CFO, I will give a few thoughts about sort of what's happening in the marketplace, and what is our strategy going forward. I've said before when I took this position that we have a firm strategy.

Looking at the market drivers as we speak, it's, as you know, geopolitical uncertainty in many areas. We have the Middle East, Iran, Iraq, Syria, U.S.

connected to that also instability a bit in the Asian side of the world. And in Europe, many things are happening.

Of course, when it comes to the European Union, the European defence fund being established, U.K. is the Brexit is now fact.

So, this creates sort of a situation where I see that many countries are increasing their defence budgets, and of course we try as be as relevant as we can supporting the defence capabilities for many countries. Technology pace is an important fact of this.

Many defence forces are embracing new technologies using AI's in the decision support, handling a vast amount of data it's becoming more and more sort of a factor and the defence capabilities of many Defence Forces. So, digitalization is an important trend of course which we are embracing as well.

What we are doing now is to continue to be more efficient in the market, more selective. We will establish ourselves more and more not to the expense of how we are in Sweden but creating more operational capabilities in a few selected countries.

We've talked about the U.S., UK and Australia. We have other sort of runner ups on that as well.

But there will be a few selected countries where we will try and fill gaps in certain countries defence capabilities and growing sort of complete operations in those countries. That's an important part of our strategy.

In doing that, we look at the international partnerships, of course, sometimes we can do it on our own in certain countries, sometimes we have to find partners to be successful. And that's also a very important part of strategy.

We have launched a new market organization with a CMO, Chief Marketing Officer in the Corporate Management that is creating more efficiency in the market and more flexibility where we sort of embrace prospects. We will grow as a company definitely but make no mistake, we will continue to invest in our core areas.

Those being aeronautics, command and control system, sensors, underwater systems, and also the advanced weapon systems but the content of those have to change continuously looking at the pace of technology. The digitalization on the sensor side, the artificial intelligence algorithms supporting the decision, support for the end-user and things like that.

So, we will grow, we will continue our journey on our profitability towards the 10% target while we are continuously investing in a new technology. So I'm really positive looking at the future.

We have a great portfolio, fantastic engineers and employees and fantastic technology. And we are more and more sort of getting a - sort of more penetrating the market in an efficient way.

So with those words which is a brief summary, I'd like to hand over to our CFO, Magnus Örnberg.

Thank you very much, Micael. And let me dig into our financials.

And I will reiterate the few statements here. We have a stable order intake for the year and that combined with the smaller size orders that grew again.

And with a strong backlog, we are now able to deliver a good growth. 7% reported 6% organic and that is very much in line with our outlook.

We have good project execution and we are more efficient in our operation. And that together with the volume growth, we now see strong earnings improvements.

And like Micael said, this is probably the highest level on absolute numbers and we are able to increase operating margin also in line with our outlook, Having good execution and delivering on what we should do also gives us the opportunity to achieve the large milestones payments and this is what we have seen now in the quarter four and of course some of those achievements that we did was to be done in earlier quarters. But now came the large payments.

And I have to say that we have also had good collection in the quarter. And also to please note also that we have receivables programme that we sometimes use managing cash on a sort of quarterly basis.

We have not utilized that at year-end. And the Board are proposing an increase in dividends from SEK4.5 to SEK4.7 per share.

Let's look into some of the other KPIs. And of course, the most important KPI for us is our order backlog.

The size is good, we have some 93 billion, but maybe even more important is the duration or the timing of the backlog. And as we can see now here, we have some 29 billion that we are planning to execute this year.

And that's the highest level that we have ever been to. And that will also support the growth going forward.

We can also know that also for 2021 we have already a better backlog again than if we just went back one year ago, so that that is good. Order size we've talked about it, we are creating a better base in the company now with more small to medium sized orders.

And that continued all to for Q4. So how does it look for the various businesses and first of all, I would like to state that the orders and the distribution of the orders are very much supporting the backlog in most of our businesses, which is very good.

If you have a good backlog that is spread well over the company, it's easy to drive productivity improvement and efficiency and I think we have that now. Of course during the year I think surveillance contributed very well with more orders.

This is both in radar and sensor but also in command and control. I would like to highlight also something that is not included in the backlog and that is the framework agreements especially in Dynamics and highlight the big order that we got for the U.S.

Army. Okay, good order and order backlog, let's see how that plays out them for the sales and then we have growth now, basically throughout the company.

And that is both demand driven but also on force of the project execution. The highest growth that we saw last year was basically in Dynamics and of course, that is very much driven from demand and the volumes and our ability to deliver and we had high deliveries in towards the end of the year.

And I would like to say also that recurring orders are really supporting support and service and that is good to see that growth and also in IPS we see a demand that is supporting the volume. Volume is important and this can be very clear here on this picture.

Volume is of course a big driver for improvements. And several of our BAs are now showing improved for operating result and some, I think volumes but also efficiency is driving that to a larger extent.

In Dynamics for sure volume is supporting the big improvement but we also had good deliveries and help from that towards the end. Surveillance both sales I would say but also product execution contributed in a good way.

And in Kockums, we have a challenge on the result there which can be seen. This is a combination of sales going down somewhat but also that we are in the transition from development to production with all those industrialization activities ongoing as we speak.

Cash flow very important for us and we have good cash flow from operations. We are still investing both in working capital and in CapEx.

But in the Q4 we see what happens when we start to hit important milestones and start to deliver. Then we have seen the working capital in quarter four reduced and cash starting to come in, and of course our aim is to continue a journey of positive cash flow going forward.

Financial position yes, with positive cash flow, we are now strengthening the balance sheet. We went from some 10.5 billion in net debt in Q3 to now 7 billion.

So that's a significant improvement. And I would like to highlight that a large portion of that is of course the net pension obligation that we are still discounting at a very, very low rate.

So that's mainly that reason but also IFRS 16, a couple of billion. So what we will do now going forward 2020, of course the market efficiency that we are looking at and targeting key countries now is important.

Of course, that should drive order intake. Project execution for sure is going to be important now we are getting very much closer to significant delivery milestones.

We want to continue our work with our sharpened portfolio. And we have started out in a very good way.

Now we're going to continue with that during this year. And of course, all effort should drive earning improvements and cash generation.

And with that, I would like to hand over to Merton to handle potential Q&As.

Thank you very much Magnus. So we will now start the Q&A session.

And we will ask the operator to take the first questions from the teleconference viewers and then we will follow on with the questions that you have posted on the web through our audiences on the website. So I would just like to highlight here again that if you have questions, you can post them under the video on the website and we will pick those questions up during the session.

So please, operator, go ahead.

Hi Micael, Magnus, Merton, I have few questions from my side. Firstly on just a clarification there on your new wording on the outlook specifically on the margin side?

Am I right in thinking that the new wording doesn't really change anything in terms of your own thinking? That's my first question.

No, I think we are on the right track. We are having a journey towards our 10% long-term target so nothing has changed now.

And on your second commentary on the operating cash flow for 2020, you say that you aim for positive operating cash flow. It could be sort of interpreted as somewhat of a weak message to some extent.

I'm not sure if that's what you want to communicate, but maybe you can give some more color on this? And to what degree, visibility or certainty do you have for cash in 2020, is it at similar levels as the same period last year, would you say?

I believe we said before that we have sort of view that from Q4, last year and 12 months rolling we've said that we would have a positive cash flow. Now going in to phase where we are having a better balance between development and production, we are in a middle of an industrialization phase I would say.

I think we have better predictability in terms of meeting milestones and then being - having better ambition now and a more certain ambition to have a positive cash flow. So it's based on that, of course that we are entering into a new phase.

And I agree, I think I mean, we had good visibility, I think we have shown that also last year and over 2019. And for us, it's important also to show - shift from negative cash flow to positive I think that's the message how that should be read.

At the same time, always have in mind that we have the volatility on cash between quarters in our company. I think that's also important.

And I guess, just coming back to that. If we look at cash throughout the year, should we have a similar pattern as we have seen historically, like Q4 will be a very strong cash-generating quarter?

Or will this year change in any sense?

I think we will have - I think it's difficult to compare patterns. I know that 2018 and 2019 has had very similar patterns.

I would say that, I think and I believe that we will have a little bit more volatility this year, and it's not going to be exactly the same shape, but that sort of all negative and then all positive towards the end. I think that we would have a little bit more volatility as I see it now.

Okay. Very clear.

And just switching topics on talking about Aeronautics, Q4 margin side. Slightly weak in my view, at least but if we look on the full year, margins were actually down compared to '18.

And I guess, marketing expenses is the big one there. But were there any - was 2019 in line with your own expectations.

Obviously, I realize that the longer-term contract is the bulk of profitability here. But can you maybe elaborate a little bit on that, how you explain - how you expect to lift that going forward?

No, but I think you're right I mean, it is according to our plan. Definitely there are a number of campaigns, of course that we put a lot of effort into.

And that is a trade of course doing that. But it's long-term business that we want to win.

And I mean, the most obvious ones are Finland and Canada but there are also a couple other ones that comes in. So the expense on the marketing side is, of course a reason why we are sort of almost flat on profitability but we are absolutely following plan and also, I see aeronautics improving going forward.

I agree we are following that and - but I think we could probably add also that 2019 was probably the biggest industrialization period for aeronautics in many, many years. So we have basically taken a lot of effort in setting up also this production that we are now want to load during this year 2020.

So I think that's also good otherwise marketing of course is effort forward goal, yes.

And final question. Final question from my side is on Kockums.

Can you talk a little bit how you aim to lift margins there? Obviously, we've seen that you have appointed a new business area head, but what efforts will you put forward to lift profitability?

And I'm not talking about sort of winning export orders because I assume that would obviously lift profitability. But excluding that factor, can you talk a little bit about that, please?

Yes, I think one has to realize that building, building a shipyard modern one from the point where we started in 2014 is a tremendous task. We have invested heavily in both infrastructure - sort of employing competent resources into organization and processes and tools.

And eventually of course, that has to pay off. So there are through the investments that we have done for a very modern sort of facility.

And also new digitalization using a digital model the same way we do on the Gripen side more or less digital twins and all that, that takes some time to get sort of into the organization being used in a correct way. And that needs to pay off.

So that's one way of course, to now lift profitability. Then again, I want to sort of say that we need also more contracts into the organization and we are I have no other ambition than to make this extremely successful, both revenue wise and profitability wise.

That needs international contracts but also Sweden has responsibility to make sure that we have a long-term stability in what we do. Are you happy with that Douglas?

Thank you I have a few questions and first one are on the frame agreements, if you can give some more color on that and the growth driver near term for that if it is mainly dynamics an also if you can get some kind of quantification? Thank you.

Well, if I may start and I mean yes, a couple of them all sort of connected to the weapon side and the ground combat weapons side, both in the U.S. and Sweden.

And they are potentially substantial. I don't want to sort of specifically guide on it, but it's at least SEK5 billion and things we haven't taken into account.

Then you have to also look at the T-7A programme where we are in an industrialization phase, EMD phase. We haven't taken into account that that program is sort of framed into sort of 350 aircrafts initially and the potential on that of course, that's not in the book side, but those are two examples.

And on the order with the potential order from United Arab Emirates, on the side, do you have any comments there or what to expect, have there been any news since this was announced?

No, it was announced in November last year and during Dubai Air Show and it was perfectly clear announcement that they're going to contract to more globalize and we’re working that as we speak. It's sort of the process with documentation and finalization of all documents and signatures, but it's going ahead as planned.

Great. And on your backlog duration and your phase growth target for 2020.

Can we get some comments on the difference where you see will be the one that contributes a little bit more or little bit less on your growth target?

Yes, normally we don't break it down. But I mean, if you want to highlight something, I think we can see a little bit continuous trend from 2019, I think dynamics of course, we’re fully loaded and delivering as much as we can.

I think there we have potential and also in surveillance in light of yes, especially the order that we just talked about and I think that's maybe two areas where we will see a little bit quality above average margin or gross.

Maybe just continuing on from that last topic about loading. You had a very good year on small orders and you're also in a period now where you're loading up on the Aeronautics side.

I was wondering if you could give a sense on whether the small orders impact is something - is unusually good and the impact was mostly in '19? Or would you expect that also to be in '20?

No, I think we have a very good opportunity to continue to grow the sort of smaller orders as well. It's actually based on an extremely good portfolio that we have created.

And the need in the marketplace is growing. So I see that continuing, and it's very good for our company.

Okay. And then on the Aeronautics side, do you expect the loading to be very much at the end of the year, end of 2020?

Or do you expect that to sort of develop up through the year, that we'd actually see that through the year?

Well, I think I talked about sort of the activity levels evening out a bit over the year, and that was the case 2019 compared to 2018. And I see that continuing the quarter four will also be the strongest quarter, but it's good to see that we have a good activity level that is rising also in the three, first quarter of the year.

And I see that continuing here.

And then just on the milestones as they as far as they affect cash flow. I mean, you've reached some very important milestones not just in the Gripen but also globally in terms of delivery and flying.

Does that mean that the milestones that you achieve going forward are more cash flow attached as well as opposed to say recognition or revenue attached?

Well, I mean the fact that we going from sort of a very intensive development phase through an industrialization phase, you can call it low rate initial production phase. When you get into production of course, cash flow is connected to deliveries in a different way.

So that makes it more predictable that is what I can say and we are entering into a healthy balance between I think development and production.

And as we have commented earlier, it's of course we’re trying to push cash also into development phase but normally you have a better chance to get paid when you actually deliver the physical products, I agree totally that this is exactly how it's going to play out that a bigger portion of cash for those kind of milestones where we actually deliver.

And last question please is just on your comments on forward development for the company and investing in your key areas. If you look at the level of R&D, that's capitalized in 2019, it was just under $1.4 billion.

Would you expect that number to continue to rise then in 2020 and 2021 or is this reflecting some of the earlier comments about development and product?

It's going to continue a bit forward 2020 and 2021, yes, I don't know if you want to comment further in on the details in that.

I can say that. I mean normally we don't comment exactly on the volumes but this year, we will continue on a high level.

Let's put it like that. Most likely we will see some reduction in 2021.

And I think these two years will be relatively high but this year will be high in line with last year.

So we should see that as a reference level not as an increase rate, that’s what you mean?

That’s correct.

Just one also question on CapEx. You clarified the capitalized development side but can you also comment on tangible investments?

We have seen an increase in CapEx in the last few years and that is mainly connected to our I would say change in product line for example, going from Gripen CD into Gripen E basically a new line. It has also connected to as Micael described the whole action that they have taken with them revamping the whole shipyard and also setting up the new processes.

And I would foresee that CapEx level will be still be high in 2020. We're not going forward a year but for 2020 we will still see a high level on that one, yes.

So sounds like may not will we have the similar development of capitalized developments still high or stable in 2020 and decline in 2021 or?

I think it's a little bit too early to comment on 2021 but I would say high in 2020, yes.

And your investment in the U.S. is that primarily in 2020 or if it during a longer-time period?

I would say it's spread over 2020 and 2021 mainly building the facility that has now started in West Lafayette. So yes, those two yes.

You discussed the cash flow profile earlier on the call, but when it comes to revenue and margin on a quarterly basis, can you just perhaps give us some idea of how 2020 will develop? Will it be similar to 2019 or will it be more back-end?

I think we’re not going into all that quarterlized outlook I would say, I mean we are fully loaded on certain areas. So you leave it like in line with what Micael said that we are happy to see a more even loading in the year.

But as you know, Mikael the dependency on some of the volume that we see in our companies also when we do deliveries especially within dynamics and I cannot comment exactly on where those large sort of deliveries are but in general, I would say loading is full and we’re pushing that already from the beginning of the year.

And when it comes to Sweden, the FMV customer, the Sweden has a bit weak in terms of revenue. Can you explain this, and the background of this, I guess it's of course partly maybe aeronautics, but maybe other areas as well?

Well, I mean, there has been some time now, where new initiatives have been taken. We haven't seen the result of that.

I look forward to new defence bill. There's a lot of activity in that where we need to be relevant supporting them, the Defence capability in Sweden, so maybe it's been flattening a bit lately, but I see that we can take an increase share of what's happening in the Defence but it's not finalized yet that will be decided early next year.

Maybe we're in the end of the year this year. But we are following that closely.

And we are relevant in all domains I would say in their domain, army domain, land domain and in the naval domain. So I think Sweden will have - they’re growing defence capability that will have an effect on us as well, positive effect.

So this development in 2019 is only temporary, I guess?

No I see that sort of an increase level of activity from the Defence Forces in FMV in Sweden we will have a positive effect on us. So looking forward, I think it will grow yes

Final one, if I may when it comes to delivery for Gripen E for to Brazil and Sweden. Can you maybe give some indication at least how this will progress in 2020/2021?

It will take a few years before we are on sort of full level and delivery rate. This will be built up now - sort of in parallel where we are now conducting our test and evaluation with our customers.

Many, many flights will be done now during this year and also last year, of course, but it's initially 2021 I would call it a low rate initial production. Beyond that it will start to ramp up and more aggressively

I have a couple of questions starting with cash flow again, when you tell us that you expect quite volatility cadence quarter-on-quarter for 2020, how does it kind of relate to your previous comments that you still would expect the cash flow to be positive on a rolling basis during 2020?

No, I think we should look at it over the year of course, and that should be looked very much over the full year. I think that's how we have to look at it.

But I think it's difficult to start to guide on every quarter and that's why I'm saying we can have weak quarters and we can have stronger quarters throughout the year. But our sort of aim for the full year is that when all is said and done, we should have a positive cash flow that's our aim yes.

And then on GlobalEye deliveries can you disclose when those will happen? Will it be in the say first half of the year or second half of the year and also, what kind of cash flow benefit could we expect from that?

Well the deliveries I don't want to comment in detail exactly when they're going to happen. But we're going to deliver this year that's the case.

And there is cash flow connected to that. And I don't want to sort of quantify that exactly to that delivery.

But of course, this is important milestones for us this year, and connected to the positive cash flow that we talked about.

And of course, part of that.

That is important for sure.

That is going to happen this year, and it's looking good.

And then the last question for me is on aeronautics. We have seen some sales swing now in Q4, and also 2019 was up by only 2%.

How should we think about 2020 also given the fact that you are ramping up production of Gripen and starting production of T-7A. Do you expect the division to grow sales or say in line with the group or will it be still kind of difficult year?

Yes, a little bit like I said, when I commented before on sales, I highlight dynamics and surveillance could be probably above average growth rate. So I think I leave it at that.

And then you can then think of all the others, but I think that how I sort of - how I would like to comment at this point in time.

We have one more person on the line. Let's have that question.

And then we have to - we want to pick up some questions on the website.

I'm really sorry about this because we've almost done this today but on the cash flow the fourth quarter didn't quite work like I thought insofar as contract liabilities went up and contract assets came down a little bit. Am I right in thinking it's the contract liabilities going back down again, that could cause some volatility?

And that in essence, the contract assets remain really high probably we were 5 billion or something higher than at the end of 2017 simply because we haven't really started the deliveries, is that how it's working?

I think you're onto something Sandy. It's obviously contract assets will be significantly reduced when the actual physical delivery will take place, that is exactly true.

I think another point, which really helped us in Q4 this year, was very good connection. So that is, which I was very pleased to see as well.

So not only good performance and milestone payments and all those activities, but also that the real payment happened. So no, but I think you're right, and I think you will see some significant changes in those accounts that you bring up now in - during this year when we start to see that so, yes

It's only taken me four or five years to get a hang of it and thanks ever so much.

You’re welcome Sandy.

Thank you very much. So we are continuing with some questions.

We have some time left here to have some questions from the web and there's actually several. So I'm going to pick a few interesting here ones.

I think the first question is related to we talked a lot about organic growth. What about M&A growth and considering the portfolio what could you consider could you elaborate a bit on that?

Well, connecting it to our - what I will call it nationalization where we want to go and establish ourselves more profoundly in certain countries. I mean that could be done organically in partnerships or through M&A.

I wouldn't want to point out any specific area, but we're looking at this all the time. So it's definitely on the table as we speak continuously so yes could happen, but I don't want to go into details.

I have a question here from Pavan from Citibank. And he's wondering again about the cash but I think already we discussed that.

So his second question is if you can touch on some of the larger Gripen order campaigns that you're working on. And in particular, he's mentioning Finland, Poland, India and Canada?

Sure well, Finland is in a very intensive phase, we have just delivered our second proposal to them. And we have done our flight evaluation over the last week, according to plan, and now we go into a more detailed phase and approaching sort of I guess, best and final later in the year.

And then they are going to decide. I think we have a very, very competitive offer.

As you know, we both GlobalEye and the Gripens so I'm positive going for the future yes. Canada is another example where we working heavily now on the proposal that's going to be delivered end of March and which is very sophisticated one as well in terms of how it's done.

So I look forward to looking at the evaluation from their side as well. India is still we are waiting for the expression of interest that were supposed to be delivered to us and others of course in Q2 to this year 2020 quarter two and that is sort of a combination working with a partnering country as we know it now.

So we're looking into that and we are prepared to go into that discussion with partnerships and also proposal work on that side. Then there are a couple of others coming up now.

Croatia issued a new request for proposal very wide one with both new aircrafts and used aircraft to 1uite a few countries and players, we're working that an evaluating the proposal to see how we can with a very short lead time on our aircrafts provide something on the Gripen side. Those are a few examples.

Thank you, Micael. I'll go to you Magnus.

I have a question for you here on the - from an investor here from London based - he is asking what is the level of receivables sold at the end of the year. So literally he is wondering if there was any receivable programmes in Q4?

Good question. We have receivable programme that we sometimes utilize and now we have not utilized this quarter.

So in essence the cash flow in the quarter is even stronger than reported and that’s how. So also, we - I can we report back that we have not utilized that for this quarter.

Thank you. We have actually another question that I want to follow-up on to you Magnus as CFO.

From Sash Tusa at Agency Partners. He is wondering about the tax rate for going forward.

Will it step up from 22% to 23%? So there's a question about the tax and tax charge do you have anything to add?

Yes, we have said that we're going to be around that tax rate 22% to 23%. And that is, of course have to do with the where we generate most earnings as of course in Sweden and the tax rate there.

We have seen increase in tax rates, in some areas and that is because we are now earning more in some higher tax countries but of course we paid a tax we should and we manage that. But I would say no big changes I think it's going to be around at level if everything goes as planned yes.

I have another question that I think is worth highlighting from David Barker from Bank of America in London. He is wondering about an update on the Tempest programme.

And he's saying here the programme already seems to be making progress with the U.K. government paying investments.

Do you think that this programme will step up and will it eventually step ahead of FCAS? Do you have any comments around this?

Yes, it’s an important programme to us, which was then supported by the MOU signed by the Swedish Defence Minister and the U.K. counterpart in summer last year.

We've started the study phase according to plan and results will be given late this year. And then we go into more of a concept demo phase, the next five years.

So we're working according to plan and we have a great collaboration with BAE Systems in the U.K. So I look forward to that, taking shape going forward.

What will come out of it in the end is of course not sort of set yet, but it's a very important programme, embracing also new technology. So which will be fed back into our existing platforms Gripen E so this is key programme to us.

I will round up with one last question. And this is also - this is Sash Tusa again, and he's wondering about the G/ATOR Radar for the U.S.

Is this fully booked in the backlog or is this some form of a framework agreement? And he's also wondering - what is the value of this potential agreement for the next extended period?

Well I think yes, you're absolutely right that this is not fully booked in terms of the coming year. So production is more or less taken in on a yearly basis.

I can't really evaluate completely but its substantial value to the U.S. operations absolutely.

So it's important franchise programme to us as well. But it's a kind of framework thing yes.

Perfect. I have - I can ask one more question and then we'll try to wrap it up.

We have a question posted here from Matt Johnson asking any updates on aggressive fighter market in the U.S.?

Well, we are awaiting sort of the wing-by-wing acquisition of certain capabilities. We have provided our type of offer when they will get to that sophisticated level of using a potential Gripen as an aggressor type of aircraft.

I don't really know but they're building incrementally this capability and they know what offer we have on the table. So I can't tell in time exactly but we're still monitoring this of course and pursuing it.

I think that was all of the questions from that we had today. And if you want to say any final remarks before we end this presentation.

Well, thanks very much for joining in. And it's an exciting year that we have behind us.

And I can only say that I'm really optimistic going forward. I'm honored to lead such a fantastic company, with all our fantastic employees and innovative company and the market prospects that we see.

So thank you very much.

Yes thank you very much.