Multiconsult ASA
OSE:MULTI
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Multiconsult ASA
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Good morning, and welcome to this presentation of the results for Multiconsult for the first quarter 2024. My name is Grethe Bergly, I'm the CEO. And with me today is also our CFO, Ove, who will take you through some of the more details with respect to the figures later on.
These are the KPIs that are the main drivers for the Multiconsult business. And as you can see, there's good growth both on revenue and in particular, the billing ratio. The result is that this is an improved performance compared to the first quarter 2023. We have increased the revenue, in particular, driven by 10% organic growth. There is a good result overall in the whole group. And we see that there's been high activity in the quarter, which has also then resulted in a significant improvement of the billing ratio. We see that in the period, there's been a stable demand for our services. And we've had both a good sale and will continue to increase our order backlog.
Looking more detail into the market and sales. We have had sales in the period that are very well distributed amongst the 4 business areas that we operate in, and they are, to a large extent, confirming the trends that we have talked about in the last quarters. We see that there are now projects related to water treatment. We see that there are onshore facilities for salmon farming. We've had a good project within housing and service center. And in Denmark, we've won a very significant project within pharma, life science. And this is a good example of how the skills and the references that we have in hospitals are transferable to other industries.
We have also won a project -- a hospital project in Sweden, confirming to a large degree, the strong position that we have within hospitals. At the same time, there's also been additions to some of the larger ongoing projects that we have talked about previously. The result of this is that -- the sales has gone marginally down from the first quarter 2023. But I'd like to remind you all that we had a record high sales on 2 large hospital projects in the first quarter last year. So the underlying sales is on par for the 2 comparable quarters. And as you can see, we continue to build our order backlog.
There's been 2 events that's worth mentioning in this quarter. The presentation of the national transportation plan for Norway has been put forward, and we see that we are well positioned for the projects that are given priority. And in addition to the traditional projects, we see that the authorities now are putting emphasis on climate robust, making climate robust solutions and also looking at infrastructure as part of the increased risk that we see on the geopolitical picture in the world.
There's also been a conclusion on the European performance and building Directive. This will have a direct impact on how property owners will have to develop and improve the properties that they have in their portfolio, and we expect that this will give quite a lot of work for us, but over a time scale of 5 to 10 years. Looking at people and organization. We are now 37 3,772 employees. And as we explained in the third quarter last year, all new employees will be given a number of shares in the company. And in this quarter, we have issued 2,720 shares.
We have a new director in the region West in Norway. He is replacing the director that was there, who is now part of the executive management team. We also donated 10 SEK 100,000 to engineers without borders in the work that they do to ensure drinking water to the civilization in Gaza. And we are seeing that the integration of the 2 companies that we bought in Sweden are now well on the way with the integration with Itera. When it comes to excellence, it's -- we are pleased that our Polish daughter was awarded the Technical Adviser of the Year price. We see that link architecture is listed amongst the top 100 architects offices in the world. They ranked as #44, and the Isago at Svalbard was awarded the Solar Energy Award for 2023. And this is a significant award in that it's the first off to show how we can use renewable energy in the Arctic and develop methods for off-grid societies. Also Stu was awarded the building of the year for 2023.
And with that, I hand you over to Ove.
Thank you, Grethe, and good morning. We will have a closer look at the numbers for first quarter 2024. And we start with net operating revenue for the quarter ends at SEK 1.367 billion. That is an increase of 4.3% from the same quarter last year. The organic growth in this number are 9.8%. And on top of that, we have the M&A activity, 3.2%. The majority stems from the purchase of lab last summer, but also some from a helm that came into the group from December last year. The calendar effect is negative by 8.7%. We have 6 fewer working days this quarter compared to the same quarter last year. The difference is the Easter and our calculated effect is SEK 113.7 million.
The mine driver behind the growth are a high number of employees, 349, that is 320 full-time equivalents. We see this in the graph underneath has increased capacity. And then we have the improved billing ratio also mentioned by Grethe in all 4 segments and the billing ratio for the quarter, 7.5%. That is an improvement on 2.5 percentage points from last year. So following the trend from Q4 '23, we have full focus on productive time throughout the group.
EBITA ends at SEK 136.8 million. That is a decrease of SEK 36.8 million or SEK 79.5 million since last year. But the margin is still 10% and underlying EBITDA adjusted for the Caleneffect is SEK 250.5 million. This is shown in the alternative performance measures in the report. And that gives an underlying margin of 16.9%. That is an improvement from last year on 0.5 percentage points.
The order intake, it's very strong, SEK 1.847 billion and also a solid order backlog, 9% -- 9.3% above the same level last year. So we are well positioned for the future.
Financial highlights. And this is the results then over time, and you see the results varies between the quarters in line with the number of available working days. First quarter is in orange. And starting top left, we see the growth in net revenue, 4.3%. But we also see that the rolling 12 in blue is still have a positive trend. And the same with the billing ratio top right, improvement from last year, 2.5 percentage points. And you also see that the rolling 12 has no shift upwards on that. And also the number of employees increased by 10.2%, and then Don left gives us the result for the quarter of 10%. And a good underlying performance on top of that as commented.
Then the results per segment. And we remind you that the architect segment was introduced from Q2 last year, includes both link and lab and all numbers are first quarter compared to the same quarter last year.
Starting then to the left with Oslo. The underlying performance in these segments was strong and better than last year. The drivers is the growth in number of employees. And on top of that, increase in billing rates and improved billing ratio. As you see, the reported net operating revenue was SEK 4.8 million lower than last year, a decrease of 0.9% and EBITA was SEK 35.2 million lower than last year. But the key driver for this reduction is the negative colon effect of SEK 48 million due to the difference of Easter.
Moving then to the right to Norway -- region Norway. The net operating revenue increased by SEK 2.3 million from last year, an increase of 0.4%. The EBITDA, SEK 66.5 million was lower than SEK 23 million, but the calendar effect is negative by 1.8 million. That means that the underlying performance in this segment is significantly stronger than last year. We have a solid growth in the capacity, and we have improved billing ratio and on top of that, also improved billing rates.
Then we move rather right again to architecture. The growth in net operating revenue of SEK 24.1 million or 14.2% is mainly caused by the corporation of ALA in these numbers. The calendar effect is negative by SEK 15.5 million, and that is explaining the majority of the deviation from last year.
So some few comments per company, starting with Link Norway. We remind you that the underlying performance has strengthened caused by the improvement program that we launched at the end of 2022, that is focusing on all aspects of the P&L. But the calendar effect and the sales market in some parts of the country and in some business areas has put pressures on the results and the market situation has unfortunately also caused some temporary layoffs.
Link Sweden Underlying performance has improved from a good level last year in all parts of the country with the exception of the more challenging Stockholm market. Linked Denmark also faced with improved performance compared to last year, and the turnaround process led by the new CEO and her new management team has caused an uplift in the billing ratio. The billing rates and also savings and other costs.
The last company in architecture lab faced at a more demanding market, causing reduced net operating revenues. Alabis focusing more on the early phase market, whereas link is more exposed to the public sector. And to compensate for a sales loss there has been unfortunately a number of temporary layoffs in the company, and lab is delivering negative results for the quarter. In total, we see a reduction in number of employees of 3% compared to Q4 last year, and we have 30 temporary layoffs.
The last segment, International. Net operating revenue increased by 31%, up to SEK 96 million and the currency effect is positive by SEK 6.5 million in this. The main driver for the improvement is high activity in Multiconsult Polska and also the integration of helm in Iterio. The caller effect is near 6.4 in the segment. EBITA has improved on Polska, but integration cost of the health companies are putting pressure on the results from Iterio this quarter. And also to remind you that in the balance sheet, we have introduced the effects of that was bought the first quarter this year, also in the number of employees and in the order backlog.
Okay. That was the results and then some finance -- financial position. Starting to the left on cash flow. So we ended 2023 with a cash situation positive and 278 million. And we have created a positive cash flow from the business, from the operation, SEK 152 million in this quarter. We have a seasonable change in working capital that is mainly work in process, but also payment of public taxes, VAT, but an improvement in accounts receivable in this. Cash flow from investments, that is half from [indiscernible] but also from the new drilling vessel that we will have delivery on this summer, and we also have a repayment of long-term debt that you see in the financing situation.
So including IFRS 16 effects, we ended the quarter with a positive cash of SEK 71 million. And also to the right, you see that we still have a strong financial position and that the gearing ratio is low, 0.87. So we also still are a solid position for the future financially.
The last from me, the free cash flow. In the dark blue, we see the cash flow from operating activities, that is negative by SEK 28.4 million. That is mainly the operational -- operating profit corrected for the change in working capital and also the cash flow used in investment activity negative by SEK 37 million, and that is in the light blue line. This is excluding acquisitions. And from the last 12 months, we have a positive free cash flow of SEK 94 million.
So that was the last from me. I hand it back to you, Grethe.
Thank you, Ove. Looking at the market structure, this shows the revenue split on the business areas that we operate in. As you can see, it is an overall increase of 6%. The distribution between the 4 business area is, as always, very stable. But you can see there's a slight decrease compared to last quarter when it comes to building and properties. And this is an effect of us transferring some of our people into projects within both primarily in energy and industry and market and environment. And it just -- it's an example of also of the robustness of the business model that we can move people into the areas where we see stronger growth.
This time, we would like to give you a little bit more insight into the market trends when it comes to transformation and urban development. This is an area where we see a large growth potential. It's a tendency that we see in all the major cities, but also in smaller urban areas, where we see that the complexity of developing these areas are increasing, and we see that the interdisciplinary services that we can supply with architects and engineers, has a huge value to the clients who want to take on these tasks. We need to, in the future, to create cities where people thrive and where it is made easy to make good climate-friendly choices. We need to develop cities where we are restoring nature and balance with the natural systems.
And last but not least, we must reduce green light gases emission for the existing and future environment. And to do this, you require new skills and you require that we put together the project in a different way from the traditional when the architect goes in and do their plan. This is an example of how our lab is involved at the moment with strategic plans for several large areas in Oslo. And it's a requirement that we are able here to see the big picture. And scale up on the interdisciplinary cooperation that these areas require.
It is no longer enough to have a building and look at the building as an entity on its own. You need to have the ability to see how this building interacts with its environment, how you create mobility solutions around the buildings, how you get your energy source, how you make that circular way of solutions that you can reuse and you make a flexible solutions. And in this, the cooperation that you need from the architect and the engineers require new skills and Multiconsult is able to deliver on all the aspects that you need for a successful and sustainable solution like this.
We also see that nature is coming as a much more important and stronger driver than we have seen in the past. And again, it requires the people who also in the early phases develop an area need to take in new skills, new premises are set for housing development. And together, Multiconsult and the architects are able to provide good and sustainable solutions for these major challenges. Here's an example from Oslo, call Galleri Oslo. This is what it looks like today on the left-hand side, and this is how when you start the transformation of this kind of area, you end up with a solution where it's just not how the traffic is going to be and what the building is going to be, but you take into a lot more aspects and skills that is required is something where we see that we can develop along with our engineers and our architects.
We are also involved with 1 particular project in Tromso harbor where we are looking at the whole area, how it can be developed at the same time as we are challenged on how can you develop this area so that it's a good area for the Maritime business. And at the moment, Multiconsult and our architects are involved with 4 and 5 of these kind of transformations and we expect that this is something that's going to be an increasing market in the future.
Finally, outlook. We expect the overall market to remain stable. There are still some variations across geography and business areas. The pipeline for upcoming projects remain robust, but there are still challenging challenges in the Scandinavian architecture market, although with some slight signs of improvement. We are expecting growth within defense rehabilitation and transformation and Multiconsult is well positioned to take a position on this. We are also well positioned to take on the project. That's been given priority in the national transportation plan. We still have a high volume of ongoing projects and a diverse portfolio -- and as we have shown you, also a very high order backlog. And we've had a good sales at the start of this quarter.
And with that, we finish this presentation. I just like to remind you the calendar days for the next presentations, 1 in August and 1 in November 2024.
And with that, we open up for questions.
Thank you. We have a question that I will translate from the Norwegian presentation earlier today. That was from Martine Cane in Nordea. The question was, how will you be able to compensate for the expected high salary increase in Norway, especially related to already agreed contracts, including frame agreements?
We've explained previously that salary increases for existing projects, it tends to be that our contract regulator are regulated in such a way that we can compensate for that. So this is most relevant for future contracts. And again, it's a lot to do with the competitive market, and we see that there's a -- there's a slight difference between the various markets that we operate in. So we do, of course, try to transfer our people to where we find less competition. And we do our best really to compensate on the rates when we see that salaries go up.
Thank you. And then she had 1 more question and that was related to the architecture market. Can you outline the outlook related to the market for architecture?
Yes. We expect that there will be increased activity but the large effect will probably not come until the end towards the end of the year and the start of 2025.
Thank you. There's no further questions.
Okay. Then we just say thank you from Oslo, and have a good day.