Bouvet ASA

Welcome to our fourth quarter presentation. My name is Per-Gunnar Tronsli. I usually bring Trude here, so Trude and I do this together. Trude is on a trip, so we've got a real stand-in in Lisbeth Sneve Viker. Lisbeth is the director of economics at BOVE. She's been with us for 16 years, so she can count better than most. We are on both the stream and here in Sørkedalsveien. A special welcome to all of you who have come here, and to those of you who are at home and following along. Welcome to you too. The way we do this afterwards, we run our presentations, and then we have the opportunity for questions and hopefully answers afterwards. Yes. The fourth quarter of 2022 marked the end of a very special year. We entered that year with a pandemic. We had barely started. Then there was the war in Ukraine. And then there was a huge pressure on value chains and deliveries from all over the world. Then we had an energy crisis. And then we had a security situation that has only been temporary. And in addition, an inherent economic insecurity and unpredictability. And for BOV, this was 2022. Even though it was a very special year globally, it was also a very special year for us. We celebrated 20 years, and we have become more than 2,000 employees and colleagues here at BOV. And then we rounded off 3 billion in turnover. So it was a remarkable year in many ways. The fourth quarter was a tough quarter. Our turnover grew from 95 million to 835 million. That's a growth of 12.9 percent. Then we grew our operating results from 12 percent to 116 million. That is quite a strong number. If you take the whole year, and the fourth quarter is also the end of the whole year, then we have reached close to 3.1 billion. The growth we have had throughout the year is 14.5%. And then we had a profitability, an EBIT margin of 13% blank. That is quite remarkable, because if we compare it with last year, the year before, 2021, which was a pretty strong pandemic year, where we couldn't use as much money as we wanted, we had a profitability of 12.6%. So it was in every way a remarkable year. And then we became more. This quarter, we became 29 more. We are very happy about that. Throughout the year, we have become 200 more colleagues here at BOV. For us, that is a high number. We have only been close to that once before. And then we have to go back to before the pandemic in 2019. So we are happy about that. And because of all this, good results and so on, the board proposes an exchange rate of 2.5 kroner per share. I would like to say that these results do not come by themselves. There are some who stand up in the morning every single day and do this job. So I would just like to say thank you very much to everyone in BOE who contributes to this fantastic value creation and these results. So I am very proud of what has been created in this year's organization. We have an ambition. You have seen this ambition a few times. We have it in front of us all the time. It is perhaps one of the most important strategies we have at BOVE. It is our ambition. We want to be the most trustworthy consulting company with the most satisfied employees and the most satisfied customers. This is an ambition. I think this is a major goal. We will never get there. It's like you become, as Marit Bjørgen says, you are not the world champion. You become something. You work to become something. This is something we strive for, towards every single day. This quarter, We have carried out both employee surveys and customer satisfaction surveys, so we have taken a little check of where we are in relation to this ambition, and I will share that a little later in the presentation. Now we will go a little deeper into the operations. You who have followed us, you know the good balance we have had between the public and private sector. Before we got into the pandemic, we had a small increase in the private sector. What happened in the pandemic was a fairly strong increase in the public sector. And it was present throughout the pandemic. And we have seen that this growth has stabilized. Oops, sorry. It has been taken over, and instead, after the pandemic, we have seen a very strong growth within the private sector. And we see from this picture, from 2021, that the pandemic has affected 52% of the private sector, 57 in the previous quarter. Last quarter it was even stronger, 59 in the private sector. So this is a balance that I think we will see in the future. The reason for this is a fairly strong growth among customers such as Equinor and Aker. and what we do in the industry with hydro, and so on. I'll get back to that later. A little closer to the sectors. Our largest sector is oil and gas and renewable energy. When it says oil and gas, I say oil and gas and renewable, and there is a reason for that. What we do on the biggest things on renewable, we do within companies that are engaged in the oil and gas sector. And this is a categorization per company, what the main business is. So a company like Equinor, you find in that turnover, and also has a large activity on the renewable. All the major sectors, oil and gas renewable, services and energy supply, we have a positive growth in all of them. What is stable is public. You know this from before. What I'd like to underline, which I think is interesting to see, is that if you sum up oil, gas, renewable energy and energy supply, it's all about the big energy shift we're facing. It's about the green shift, and it's about all the activity we're involved in. And that makes up 55% of the company's collection. We are very proud of that, and we are very happy about it, because this is a long journey, and these are long investments, and we will be working on this for many years to come. So we want to tell you what we actually do. And that's what we do for our customers. So I'm going to share some customer cases and some stories about what we do there. I will start with a customer we have worked with since 2001. We are fond of long-term customer relations, and we have been involved in the environmental directorate since 2001. The environmental directorate has a social mission. They are going to reduce greenhouse gas emissions, they are going to manage Norwegian nature, and they are going to prevent pollution. Digitalization in the environmental directorate has a very large focus. They will negotiate with surrounding states, they will negotiate internally, and not least, they will provide good information solutions to you and me, i.e. different groups of users. And here we make solutions that some of you know, others do not know. Those who follow the development of foxes, they can go into the fox base. There we find a little about wolves and deer and a little different. The environmental directorate is in full swing. Digitalization is important for them, and everything they have will be modernized. Older professional applications will be renewed, and new ones will be created, and new services will be built. And then they will build a data platform to make information accessible to you, me and everyone else who will use the information. We have been incredibly proud of the work we have been able to do at the Environment Directorate, and we were so happy that we gained renewed trust from them. We will continue this collaboration until 2026. So we will do a lot there in the coming years. And then I would like to say something else about the environmental directorate, and that is that it is a customer that gives a lot of meaning to work with. They have an incredibly important social responsibility, and it is a very popular customer for Bovere to be able to be engaged in. So that was an important fourth quarter new number we got. Then we also got a new agreement. This is the Norwegian Communication Authority, NKOM, in Lillesand. So here we get our regional organization played on again, with our region south working together with the region east. The task for NKOM is to contribute to safe, effective, sustainable communication with people and society. We have a vision to build a future society, so we thought we should win that contract. And we did. NKOM has a digital transformation project. And then we won the role of strategic shipping partner in that work. So what we are going to help NKOM with is the same amount that we are going to work with the environmental directorate. There we are going to renew, and we are going to build new, and we are going to build NKOM's new data lake. So that is exciting. It is a customer we have had for a few years, but this takes collaboration to a whole new level. And then it's always fun to talk about one of our customers that we are also very proud of. And I know that many here are users of these solutions. And at Vinmonopolet, we have had the great privilege of working together since 2012. So it's a 10-year-old collaboration. They have an alcohol-political social mission that requires, if we can call it that, a conscious approach to e-commerce. This is not about campaigns, it is not about offers. This is about the e-commerce solution contributing to the information you and I need or wishes, when we are going to use the products and services of Vinmonopolet. And then there is something else with this e-commerce solution. Vinmonopolet has a social role throughout Norway, and it is going to make Vinmonopolets products accessible throughout the country on the same basis. In addition, the e-trade solution of the wine monopoly will contribute to a good assessment of the wine monopoly. They provide good assessment and good information to maintain that position, and this has contributed to this e-trade solution. Now we are in front of the next phase. We are going to renew, we are going to improve. There we have a completely multidisciplinary team of people who work with design, who work with backend, who work with the frontend, who work with the app, that is the app we all use, and who work on the ERP side. So that team is going to modernize and lift the wind monopoly even further up. Lots of great customers. And then in the fourth quarter we also won a contract with the Riksrevisionen. And the Riksrevision's social task is to pursue all state-owned businesses, that they follow the right rules, that they follow laws and regulations, and that they work effectively. That means that the Riksrevision has a very broad relationship with all state-owned businesses. And what we are going to help them with is precisely the data platform that is going to be the basis for them to collect information, and deal with that information, and share it with the Riksrevision, and work with it in a safe and effective way. Again, there is a multidisciplinary team from BOV, who both work with how to work with this type of collaboration, work and processes, and also the technological side of how we build the data platform that will support this. So here are the pieces of Bovee, which are both organization and processes, together with technology. That is what we deliver to the Riksrevision. A good fourth quarter, and there was no way around it. I would like to highlight Glencore. The future of Norwegian industry is important to us. We are super engaged in it. And we have a lot of activity in the industry sector, especially what we do in the Grenland area in Herøya, and what we do in Agder, what we do in Rogaland, and especially in Haugesund. And those of you who have been here at previous presentations have been told about what we do at Boliden, which is a lot of what it is about to prepare Boliden for in a more competitive future, where they work better and effectively and use technology. At Glencore, we have worked with them for many years. We have contributed a lot to technology. What we work with here is organizational development. This means that the organization must be adapted, the organization and work processes must be improved, and change management must be done to get this interaction between organization and technology to work properly. in a good way. And that's what we do at Glencore. So again, you know us very much as a technology company, but as important as technology is organization. To get this interaction between technology and organization. And that is the diversity that Bovee delivers to Glencore and to many others. Nice customers. We are very proud of this. That was a little of the story of what we have been doing. And then we have done a lot of other things. I'll continue with the sectors. Oil, gas and renewable energy is our largest sector. It has also had the largest growth. We compare that with the same period last year, the fourth quarter of 2021. The main reason for this growth is that there are customers like Equinor, Aker and Wintershall. But what drives a lot of growth is Equinor. Equinor is facing an enormous transformation from a pure oil and gas company to an energy company with a much wider portfolio. And that is the journey we help Equinor with. And we are very happy to be allowed to work on that. I'm going to talk about what is relevant to renewable oil and gas, energy supply. Our biggest customer is Statnet. Everyone reads in newspapers, media and the like, how we as a society have to gear up for the green shift. That means more network expansion. It also means a lot more renewable sources coming into the network. You get a much greater complexity in the network, and that complexity we help Statnet with. So there we have large teams that work almost day and night to manage to deliver on what society needs in relation to the energy consumption that we expect in the future. So if we have services on energy supply, then it is customers like Statnet that deliver the network, and then we have the energy companies that deliver services to you and me, such as Elvia, Lyse, Skagrak and so on. So we will work in several parts of that industry. Then we have the service providers. We have customers who are involved in building emergency numbers 110 for both fire and emergency services. So that's something we do there. We do a lot around deviation. We do a lot around, there we also find companies like Røde Kors and so on. And then we have Offentlig. And Offentlig, there has been a small decline here. It has actually remained stable, flat development. And there we have an incredible number of good, important customers, not least to mention one of our biggest there, which is a large part of it, which is Forsvaret. And what happens in the security situation throughout Europe, it is not difficult to think that there are big tasks ahead of us. So we look forward to continuing to work with that. Our customer summary. We are very proud of this. Our 10 largest customers account for 60% of all our revenue, and 70% is the 20 largest. Why is this good? What is good about this is that for the customers we work with, we become more important. This means that we have to work with what is deep in the business and is essential for them to develop and stand for a future good development. We get more trust, we understand more of the customer, we get more trust and we take more responsibility and we get more interesting tasks. This again gives even more interesting tasks for people in Bove. So that is the strategy, it has always been our strategy. We develop together with our most important customers. Long-term customer relations, that's what Bove is focused on. And we keep that strategy. And then there is a general comment to link to exactly what is happening in the market today. Everyone knows that there is a good question after competence here. The fact that customers connect to actors who live in a more strategic collaboration, it is important for them to get access to the right competence. And we are cheering for that. That means, again, the circle I described, that we get more trust, we take more responsibility, it gets better for the customer, it gets better for us, more interesting tasks, more to learn. And then we get some We prioritize existing customers, and then we have some new customers every quarter. What makes up exactly this turnover in the new customers this quarter from, and then we always compare with the same quarter last year, is Voice. There we build a new e-commerce solution. And then there is a customer like Skagrak Energy. They make up most of it. So again, it's the energy industry. So here's the deal. We have an ambition. We want to be the most trustworthy consulting firm with the most satisfied employees and customers. And this quarter we have done some measurements. We do this every year and we take this as a running report. What the customers tell us is that they look at us as a long-term good partner. We are incredibly happy about that. It is in a way what we build our entire business on, that we focus on our important and long-term customers. Our ability to deliver gives us good feedback, and that we have the right skills. So we should not rest on those laurels, but if we take it as a feedback, then it is a very nice encouragement to get in everyday life, that the things we work with and prioritize, we get positive feedback on. So that's good. So let's just continue to draw on this. We believe in customer closeness. We have always done that. When everyone else went to India, we said we shouldn't do that, we should go around the coast. And we do that. What we see this quarter is that the biggest growth is in regions such as Region Sør, Rogaland and Nord. But this has changed a little. The fourth quarter is not a big recruitment quarter, but good growth in all, especially those regions. And then what we have talked about before, these establishments we have made in Tromsø and Førde. They both knew BoV's most beautiful view from the offices, so they are doing well. So we are also happy about that. We have had many good new employees who work on many of the teams that are about the customers we have actually been talking about. So we use the entire regional apparatus to deliver to the customers. And then we have a course. Our course business is not a very large part of our collective business, but it is a fairly important part. It is a part that in many ways you can see it as a thermometer on the speed of the IT industry. And if I were to give one run-through then, if we were to take that as an indicator, Stronger than ever. Because we set a back record on our course business all the time. We do two things in our course business. We hold courses. And this quarter, which we have behind us, has been mostly courses within what is about change management. It has been about Agile. It has been about service design. And it has been technology, tech course. And around the subject of conversion and the law code. That has been the biggest course activity. And if we look at the whole year, there have been no less than 6,500 participants in the courses that we have held. This is actually a system-based sharing culture, because those who hold these courses are largely BOV consultants, who are out with the customers and experience the challenges and work they are in. Then they come into the course and share all these experiences. It is a fantastic, good wheel, where we collect the experiences out, take them in and share them with the large audience who come to the course at BOV. So that's very good. The second part of our course activity is what we call our breakfast seminars. And that has been a whole bunch of them throughout the year. No less than 3,000 people have visited us at many different breakfast seminars throughout the year. And we think that's fantastic. We have many in Bovee who have a lot to share, and we do that through our breakfast seminars. So that's fantastic. And then out of this, we have some news letters and so on, and they reach more than 10,000 on our customer side. So that is therefore a very important part of our business. This, The picture is from our big living room, room 1 at the Colosseum, which we use. When there are a lot of participants, we don't have room here, so we use the house next door, and that's the Colosseum. So we hold part of these breakfast seminars there. So it's always a goal to fill room 1, and we've done that a few times. And then we have what has eventually become a Christmas tradition in Bovee. And that is that we write what we call the employee's annual report. And this is not an annual report that talks about operating results and turnover growth and EBIT. This is an annual report that tells about the people who create the values in Bovee. It tells about the people who work in Bove, who work together with colleagues on teams, about how they work in teams. It tells what they do in their free time. It tells what they are engaged in as an ideal business. It tells, quite simply, about the whole human being, about all the people in Bove, and who actually stand behind and create the values that we stand and share here today. So this employee's annual report is a tribute to That's where the values are created. And then we are happy, because we attract more and more. Of course, you can't go out and recruit so many people all the time. We have to have an environment that attracts people. When we have it, we grow, and this year we have grown by 200. That is huge. It is also something we have to work with. There are many newcomers who are going into the culture and become a part of our culture, so we work with that all the time. And then, as I mentioned, this is a pace that we have not had before. Back in 2019, just before the pandemic, we had a similar quarter. And then, again, the ambition, the most trustworthy, most satisfied employees. This quarter, we did an employee survey. And what we aim for is everything from leadership to how we judge, that is, how we experience judging internally, how learning and development is justified, how people experience being part of a safe working environment where they can be themselves and enjoy themselves, and so on. Many different parameters. that ends up in two main parameters. That is the joy of work, and that is what is called loyalty. Joy of work is the sum of all this. And the level we have here at 78, that is what we have been at for a few years now. There is a company that does this for us. They commented on exactly that. That it was actually remarkable high. They do this throughout Europe. What has happened in the pandemic is that the workload has gone up a lot. And then after the pandemic, in many companies, it has fallen. And we, among us, have not had exactly that trend, and we are quite happy about that. And we are extremely happy that people who are in Bovee see Bovee as a long-term place to be. So again, nothing to rest on, but a nice running message to carry with you, and then we just have to continue the job that is about being the best place to be, where people live, and have the most satisfied customers. So with those words, I'll just give the floor to Lisbeth.

Let's take a closer look at the figures. First, the key figures, and then the operating revenues, and the results with costs, and finally, the cash flow. Per Gunnar has been in the figures for a while now, and we can see that we have had a 12.9% turnover growth in Does it go under the geyser here? That was stupid. Does it sound better now? Yes. We have had a revenue growth of 12.9% for the quarter, compared to Q4 last year. And this year we have had a revenue growth of 14.5%. And we are now building 3 billion in revenue. And that's only two, three years ago, we built 2 billion in revenue. So we have very good speed, high growth post-pandemic, and yet we manage to maintain our margins with an EBIT margin of 13.9% in the quarter against 14% last year, and 13% this year against 12.6% last year. So we have a very good year ahead of us. If we take a closer look at the income growth, which was 12.9%, it mainly comes from our own employees, which increases by 16.9%, and the turnover from our own employees is 89% of the total operating income. Under-consultants are quite stable, with 10.6% of total revenues compared to 11% last year. They are growing in line with the rest of the turnover, with 8.9%. Other revenues were 3.4%, and you may have read in the report that they are affected by a new precision that has come to IFRS 15, where further billing of program goods will be netted. This means that 24.6 million is moved from the commodity cost line to the operating income line, so that you only show the magic of the operating income line on these products that we sell. So it is 24.6% per year, but the correction has reached Q4. But that makes up 0.8% of total operating revenues, so it is marginal. And we have not reworked the comparison figures. If we take a closer look at the turnover from our own consultants, which increased by 16.9% and 107.5 million, they are positively affected by the fact that we have more employees. The hourly rate is also increasing by 6.4%. The turnover rate is still high, although it is somewhat lower in the quarter. the same number of working days. The turnover increased by 12.9% and 95 million in total. If we look at how this is divided over the different elements, we see that the fact that we have 200 more employees gives a turnover growth of 71.6 million. The team price, which increases by 6.4%, gives an increase in the turnover of 42.8 million, and the sub-consultants 7.2 million, and this with the factoring rate has gone somewhat down, gives a negative effect of 5.7 million. Our costs increase by 13%, and we are now post-pandemic, and we have a growth. In addition, we also have a general price increase in society, and that also affects Bove Noe. The staff costs increase by 14.9%, and they affect us becoming more employees, and that we had a general price increase of 3.4%. Other operating costs that were greatly affected by the pandemic increase by 45.1%. We have shown this slide for a long time, which shows how the development has been in the costs that have been affected by the pandemic, such as travel, social, courses, And what we see now is that the activity is at a normal level, and that other operating costs measured per employee are at the same level as they were before the pandemic. And you can also see from the bottom graph here how this has developed over the past 12 months. If we look at how the increase in revenues affects the operating income, we see that the revenue increase of 71.3 million gives an increase in operating income of 21.3 million. The increase in the team price, which had a turnover growth of 42.8 million, gives an increase in the operating results of 31.7 million. Under-consultants have a lower effect, 0.7 million, and a slightly negative effect from the rate of invoicing. What we see here is that the increase in the team price clearly gives the greatest effect on our operating results. Finally, a little about the cash flow. It is always good in the fourth quarter. You can see that in the upper graph. In Q4, it was 178.4 million, cash flow from operational operations, against 201.6 million in the fourth quarter. This year, the operational cash flow was 321.3 million. This quarter is a fairly normal quarter, which is slightly affected by irregular payments and special posts, and we also have some advance invoicing from customers. In addition, we have also paid an additional exchange rate of over 50 million, and we have bought and sold some shares in connection with the share program that is linked to the employees in Bovea. And with that, I give the floor back to Per Gunnar.

Now I'll just link a few comments to what we think we have in front of us. I have been talking about this in the previous presentation, but when we look at what drives a lot of what we deliver, it is clear that all this energy, which we call energy transformation, is a huge driver. We have all read about the expected energy surplus we have in the future in relation to green energy, and that drives a lot of our activity. It drives our activity within Equinor. That shift they are in front of. And in addition, as I said, you have the whole Norwegian and also the Swedish network. It will take in all these renewable sources. It just increases the complexity and it will build connections. We hope that connections will soon be built between the north and the south, for example, but there are things like that. That drives digitalization and that drives our activity. So we are one of the big partners in collaboration with Statnet on digitalization. So that is a big driver for us. The whole security situation, a lot of what I talked about was modernization. And a lot of modernization is also about making more future-oriented and more robust solutions. That drives digitalization for many of our customers. And then I talked a lot about the fact that many of these companies were going to build new data platforms. All this, we call it becoming more data driven, is not just a technological movement. It's a lot about organizational development, change management and so on. And that drives collective activity on a lot of what we deliver. We can't have avoided the fact that as a society and as a nation, we are getting older. That challenges a good deal of public services, and that also drives digitalization. The example is very easy to follow. We work a lot with, among other things, the municipality of Oslo within welfare technology. It is clear that it is an important part of the future and our future, and it drives activity in our country. When we look at the needs of our services in concrete terms, we have only mentioned three things. We could have said a lot more, because that is actually the whole spectrum of what we deliver. We experience great demand. But of course, especially security and competence around the development of new solutions that are secure. There is a barcode here. It's about simplifying and coming up with solutions. And we see that on a wide range of customers. And then we have what is written here as change management, which is actually change management, but which is all about what I talked about earlier, which is about organization and competence and to justify processes and to drive change work in organizations so that they can get the most out of digital solutions. So that drives our activity. Then it should be said that there is uncertainty about how the economy will develop. We know others have been harder hit by it. We have experienced support after the question. But we have noted that some businesses in the public sector have experienced more limited access to funds. And then the political leadership has been out and said that there should be more money, so it is a bit difficult to say exactly how that development will be. But there is no doubt that with that inflation, the cost increase, there will be a pressure on the budgets. That will have consequences for the supplier side. Then it should be said that some of the main drivers I point to, they are so important in the development of society that that is not where it hits first. So we are quite confident when we look at what happens within energy and what happens within defense and security. That is so important development and digitalization, so it is quite protected. That was a little about how we see the economy. I'm not particularly concerned about that. We are working tirelessly and I am happy for the customers we are engaged in. And then there is something that many are familiar with. The government came up with an agreement on increased employee salaries, which meets us. Now the finance department and The finance department and the directorate of economic administration have been out and confirmed that what is the basis for the state standard, that you can refactoring the expenses you get, that this is a type of expense that is due to increases in public expenses, that is the basis for refactoring. So they will come out with a guide that was promised earlier this year, it has not come yet, which we are looking forward to, how we can refactoring whole or part of the additional cost this represents. So we don't know that yet. We have of course calculated a little on it and look at it, but we look forward to the guide. So that was what we were going to say about the fourth quarter 2022 and actually the whole year 2022. So with that we open up for questions. Yes, Thomas?

Yes, thank you. The change in the calculation principle, that is the main question, on 24.6 million, which has been taken in the fourth quarter, is it really for the whole year, but it has been taken in its entirety after Q4?

That is correct.

I understand.

So it creates some noise in the numbers in Q4.

Yes, the numbers you look at, the growth is actually lower than it should have been, and the margin is higher than it should have been. A little bit. Likely to the same quarter of a year ago.

That's right.

Okay, I understand. Thank you.

Marius Heyerdahl, two quarters ago we talked and you said that you wanted a smaller hot market. Now it's going very well, but I have the same question. What is your answer?

We have never feared a market that is a bit narrower. And I think we are starting to feel that. So we have just said welcome to that. So we are not worried about that. We have customers and we have assignments, so it's just good. It should be said that it is still a fairly hot market, demand for competence. So it's not bad times in the IT industry, but we notice that. And there are different companies that work in different ways. And there are probably others who have noticed this a little more than us. We are just happy optimists. Yes, Thomas?

I had one more. I forgot. But the other income again, the effect on EBIT would be zero based on revenue, because it was a net. But at the same time it is minus 8.6. Is there anything else, or is there something I misunderstood there that leads to that? On slide 28, with the change in revenue effect on EBIT, it's still minus 8.6 million on EBIT, but based on the calculation before the change, it would be net on income and cost, so it wouldn't have an effect on EBIT, if I understand correctly. If you could help me understand the dynamics.

Let's see... This is the change. You get the change compared to last year. Even though it doesn't have an effect on the operating result in crowns, you get the fact that you had a higher... You get the change in other revenues from last year.

It's good to have Lisbeth here. Other questions? No? Then we thank you for us. We hope to see you again. It's May when we will present The first quarter.

May 23, I think.

I hope that will be just as good, and that you will visit us then as well. So thank you all, and I hope you have a nice day and a nice weekend. Thank you for now.