Bouvet ASA

The first quarter of 2023 in Bove. It's nice that you have taken the trip, you who are coming here. And we also have on stream. Welcome to you. My name is Per-Gunn Tronsli, and I have Trude Hole with me. We are going to tell you what we have been doing this quarter. I will tell you a little about what we have been working on, and Trude will tell you a little more about the numbers. Since we are on stream, we will run the presentation and take questions until the end. We have a mic here, so those who are at home will also get the questions. The first quarter, 2023, we had a good speed when we left 2022. And that speed was good throughout this quarter. So we increased our operating revenues with 134 million to 945 million. And that is an increase of 16.5%. And then we increased the operating results. with 7.2% to 131 million. The operating margin here is 13.9%. Trude will tell you a little more about how this compares to a quarter in the same period last year, but that was also a pandemic quarter, so historically this is very good results for us. But then we are extra happy. We are facing big tasks together with our customers, so we need good people. And the fact that we increase the crew with 70 people from last quarter to this quarter, we are very happy about. When we look at the current 12-month period, we see an increase in the number of employees in BOVE, with a total of 232 people. This is historically high. We have never been at that pace before. We are both happy and proud of that, so I would like to say thank you to all the residents who have contributed to this. It is a good quarter, which we are both proud and happy for, so thank you for the effort. Our vision. This is what we are going to focus on in these presentations. We are going to build a future society. This quarter, has been influenced by high activity. We have been working on interesting things. We work a lot with how to contribute to the fact that Norway is a predictable supplier of energy to Europe. We have worked with that this quarter. We have worked with what is about energy supply in Norway, which is network development, new connections in Norway and across country borders. We have worked with the defence and the entire total defence, so that we will have a safer society. We have worked with health and welfare, Work with transport, so that should be clear for everything that happens with digitalization within the transport sector. And then we have worked with the industry, so we get an even more competitive and sustainable industry in Norway. So it has been a good, giving and interesting quarter. We are in an industry with a thriving development, and this quarter, perhaps more than many other quarters, the technological development we experience has been very much in the media picture. That just underscores a big point, that both for our society, our industry, and us as a business, this with competence development is one of the most important things we do. And that's what we work with every day at Bove. So every day we build and learn new things. This quarter we carry out We call it a little internally. We call it our most beautiful adventure. But that is our big sharing arena in Bove, which we call Bove One. We did that in Vores. 100 plus lectures, where good Bove's learn from other good Bove's. And together we become smarter. And then it is very nice when the good Boveres are raised and recognized. This quarter we have had Cecilie Vian from our Bergen office recognized as one of Norway's 50 leading women in tech. So she has a very clear voice on what is about security and the importance it has for customers and solutions that we build. And then we have Rebecca Omlandseter, who is recognized by the Norwegian organization for artificial intelligence as one of the leading women in AI in Norway. She still has some of the most important skills we build, we build with our customers. Every single day we learn new things. Now we are in our course area. The reason we got this room is that all the other rooms are full. So we had to take care of a little less facilities today. But it has been full speed. The whole first quarter, a very strong quarter for the course business. It is not a large part of our business, but it tells a story. It is a huge surge of competence and a huge need for competence in the market. And they like to come here. And our course business is not like any other course business. It consists of good residents who are out there learning important things from our customers, and take their experiences in and share them here. What can perhaps highlight this quarter in relation to the course business is that there has been a lot of leadership. that go on course. And it's about two things in particular. It's about smooth techniques and smooth development. And then it's about organization development, digital leadership, competence development, change management. So a lot of the topics that are about how we take advantage and get value out of digitization. We have also created our own course, where there is also a lot of demand, and that is innovation and sustainability. So that has been a big step to put a picture on it. For those of you who participated in our fourth quarter presentation, where we summarized the year, we told the story that there have been six and a half thousand people within the entire course business throughout the year. Only this quarter there have been two and a half thousand. So we tell you about a completely new pace in the pursuit of competence. Digitalization is good. That is what we live off of, and that is what we work for. But what we have experienced in the media, especially this quarter, is that digitalization comes with several sides, and that can be very good, but it also has some challenging sides to it. Digital social responsibility is something that IKT Norway has reached its peak for. And this is about the fact that the digital solutions we build should be built in such a way that they provide long-term and sustainable social awareness. Corporate Digital Responsibility is an international framework that is used around the world. IKT Norway is at the forefront of bringing this into Norway, so that we can use it in our daily lives, when we work with big, digital and important solutions. And there is something particularly funny. There are two Boveres who have also gone to the top of this together with IKT-Norge to get this translated, understood and implemented here in Norway. They are Pia Jøsendal and Ida Moiche. Good Boveres who contribute to the development of our industry. Let's take a look at what we have been doing. And we are always proud that we have a good balance between what is public business and what is private business. And that has been important for Bovee in all the development we have had in the last two years. As we have seen after the pandemic, the development is still in the private sector, and it continues this quarter. So a few percentage points further over in the private sector. That does not mean that we have a decline in the public sector. It is growth within the private sector that drives that development. I will make one clarification on this, and that is that this distribution within sectors is done on standard industrial codes. Not all our activities fit into that. We have made a small footnote on oil and gas, and in oil and gas is also what we work with renewable. It has its explanation. Equinor is one of our biggest customers. We are engaged in wind power development. And that turnover ends up in oil and gas. What we see this quarter is growth in all the major sectors, both in oil and gas and renewable energy, as well as in transport and services. I like to sum up a bit here, and the point I made last time is that the entire value chain on the energy side accounts for 55% of all our operations in Bobet. Energy is a good place to be. They stand for important lift, so it is long-term important. And then it is the whole sector, from what we create energy, oil and gas renewable, through what happens in the network expansion and what happens in those who deliver energy to us as consumers, such as Elvia, Lyse, Skagerak and so on. Then I would like to introduce some of our important customers and customers we have worked with this quarter. Forsvaret is a customer we have worked with for many years. For the last seven years, we have been a supplier of application development and integration services to Forsvaret. Now the agreement has been renewed, so we were out with a small market report on it throughout this quarter. It is an agreement that goes for a new four years with options and has an economic frame of 650 million kroner. The defence is standing in front of a big wave, so it is joyful. It is an increased political will to invest in the defence. And we will be on that journey. So the agreement we won is as a preferred supplier to the defence on everything that is about applications, i.e. solutions and systems that are used on all defence teams. That is what we are proud of, and we look forward to the years to come when we will continue to build on what we can, and make the defence even stronger with good digital solutions. It is also the case that the customer uses a very broad spectrum, from the technical services at our company to the more process and project related services. Last quarter, we were proud to announce that Stortingets control body, Riksrevisionen, had submitted us the agreement. This quarter, we are equally proud to announce that Stortinget was out to find one strategic partner in digitalisation. And that was us. In pretty sharp competition with all the big companies that have something to say on strategic advice, Stortinget chose to submit that agreement to us. Stortinget is also facing big challenges. We are going to develop a new supplier sourcing strategy. Safety is important for the defence. So we are going to work with identity control in the defence. And we are going to build a solid foundation for all the legal treatment that flows through Stortinget. So that is good for all of us. Effective legal treatment in Stortinget is important, and we are going to work with that. Then we have a customer we have been so lucky to work with for many years in Bergen, and this is Bybanen in Bergen. For several years, we have worked with a data platform. They build a data platform where they collect a lot of information from their business. That trust has been renewed this quarter, and now we are going to work with the collection of sensor data from the urban railway wagons. It's about really taking note of information, Because then Bybanen uses that information to work with more preventive maintenance around the city railways. And that gives more collective transport for money, and it gives better transport services from Bybanen for us who visit Bergen and those who live in Bergen. And then we have a customer, Bani Nord. A customer we are very happy to have worked with since 2005. They are now one of our top five customers in terms of turnover. Here we are working with Bane Nord. In Norway, there are 15 actors who run rail services. All of them use the infrastructure that Bane Nord provides. What we work with are all the transport- and traffic-friendly applications that are used by these actors. We as consumers, we meet travelers, we meet the solutions we work with when we are at the station and see it rolling over the big screens and when the train arrives and when it leaves. These are solutions that Bove works with. The solutions that help the carriers, the ones that transport the trains with control information and traffic information, those solutions are fully digitized, and that is what the Bovet team works with. And what concerns route planning, On the Norwegian rail network, that is what we are working with. We have also created something exciting, which is energy generation for trains. Trains produce a lot of energy when they drive down, and they use it when they drive up. We have created this energy generation together with Banenord. And together with Banenor, we have also exported the solution. So now there are nine European countries that use the energy calculation solution that we manage and develop together with Banenor. So there were four good customers who have big tasks ahead of them. So we are both proud and happy that these commitments are renewed and expanded. Again, just the clarification about oil and gas. That includes renewable energy. I will tell you a little about the customers we work with. The biggest customer, without a doubt, in renewable oil and gas is of course Equinor. The customer relationship, and we have built that relationship for over 20 years, and that is only in strong and positive development, so we are increasingly working together with Equinor on interesting tasks. and very socially critical in relation to energy supply. Aker is also a customer in oil and gas. In the public sector, the biggest customer we work with is Forsvaret, and I mentioned how we have gained new trust for many years. The customers who are facing the biggest development in the public sector in this quarter are customers like Statens Veivesen, Enkom, which I presented here last quarter, and Kystverket, which stands for all the systems that handle traffic along our coast. and the environmental directorate, which manages everything that has to do with coal basins and so on. So these are the customers where we have seen the greatest development this quarter. Energy supply. Again, the biggest customer is Statnet. They are working on the network development. Other customers, where we have seen positive developments this quarter, are Elvia, which delivers energy to us as consumers here in the Oslo and Østlands regions and inland, and in addition also Skagrak Energi and Lyse. And then we have Tjenest. Services, there it is especially what we work with within the emergency number 110, both for fire and emergency services, and also what we do for Viking rescue services. So positive development in all sectors actually. And even more positive, the customers we have, they act more. So now we have rounded up 60 percent turnover on the 10 largest, and 70 percent on the 20 largest. So it tells a little about when we say that we are happy that we get new employees in, then it is needed. And it is needed for our customers. And the customers I have talked about here now, they are in great demand. There are a lot to be done. For us, this has always been important, to grow together with our customers. We have gone from having less tasks, to being at the core of their business. That means that we know a lot about the business, and we can contribute even more. And that lays the foundation for this being long-term and good customer relations. Sometimes you would also wish for a lot of new customers, but this is a world with limited resources, and the people in Bovee work mostly on the customers we have had for a long time. This quarter we compare with the same period last year, the first quarter of 2022. The customers that have arrived since then are customers that I have participated in earlier and talked about. But that is particularly the case for Boliden, which is a smelter in Odda, where we work with both digitalization and organization development on the huge modernization project for the smelter, to build the world's most sustainable, environmentally friendly smelter. So it's a really cool project that has been going on for a little over a year. And then we work with Mote. We are building a online store for voice. So that is also a new customer from the previous period. We would like to have more new customers, but then we need even more people. So we have to work with what we can. Then we have the fact that we are growing, and this quarter we are very proud and happy that we are growing in all regions. If I were to point out something here, then it is of course the enormous and large growth we have in Rogaland. And that is a growth that is largely driven by the tasks we are doing together with Equinor. But it is very exciting to see that Bergen, Region Sør, and also Sweden, are developing very positively this quarter in terms of keeping and attracting new colleagues. But overall, as I mentioned at the beginning, there are quite a lot of new people that we are growing with this quarter. And then we are on that topic. For us, the most important thing we do to continue the development we have had in Bove, is that we keep and attract good people. And the key is that we work with exciting things, and that we have a working environment that is based on a good culture, so people enjoy it and think it's good to be in Bove. And the most important thing is that we learn. So this quarter we got a net of 70 new ones. And that's a historically high speed, the last 12 months with 232. And the key to this, and it deserves an honor to all those who work with it, is everyone who works in BOV who recommends others to come here. And then there is the leader in BOV. We do not have one central HR department that does this recruitment work. There are 160 leaders in the entire organization who work with this. And then the results of things. So we are very proud of this.

Now, let's get into the numbers.

When you compare it with the oil crisis of 2014-2015, there is a very important point, and that is that we worked with completely different customers within the oil industry. We worked a lot in the supplier industry. That has changed a lot, so what we are working on with Equinor now, especially Equinor, is completely business-critical. For example, the movement they have towards renewable energy, And, for example, what we see in gas. So, we believe that what we work with for Equinor, and together with Equinor, is strategically much more important than the period you compared earlier. We also make some assessments of that, and the calculation that Equinor is involved in, we think is long-term. We got some signals on that when the pandemic hit. When many other businesses adjusted their activity, Equinor did nothing of it. We consider that Equinor is predictable and long-term. It is also difficult, as we have become an important partner for Equinor, not to support and be part of what is actually one of the most important things, when Equinor is going to be a broad company in energy, and they are going to be the leaders in digitalization. We have a role to play, and we play that role. So when it comes to the distribution, I usually say to the board that we should rather work with the fact that we can attract even more, and then we have to grow outside Equinor.

Should I continue with the full-scale talk? As Gunnar said, we have had a quarter where we have had a high rate of entry and very high activity. We have increased turnover and we still have high profitability. And not least, as mentioned, with all these new colleagues. So we have not only had high activity on assignments, but also focused on competence development, and not least with social and professional arrangements, so we become part of our division culture. So I thought I would say a little more about that when I have gone through the figures, and then I will first talk a little about the key figures before I go into operating income and operating results. And then there is a change in the income and operating results before we take the cash flow. If we look at the key figures, we had 945.1 million for the quarter. This is an increase of 16.5 percent compared to last year. We had operating revenues that increased by 7.2 percent to 131.6 million. That gave a operating margin of 13.9 percent, which is a decrease from 15.1 percent for last year, but remember that last year was a pandemic. That was strongly affected by the pandemic. If we take a closer look at the operating income in the quarter, it increased by 16.5% compared to last year. The most important share of the income came from our own consultants, which results in our total turnover of 87.5%. Here we had an increase of 18.4%, which gave operating income of 826.9 million. When it comes to subconsultants, we also had an increase of 11.5%, which gives a revenue of 101.8 million, and the turnover of the subconsultants is about 10.8% of our total turnover. When it comes to other revenues, it is not that much, and it was up to 16.4 million. As mentioned, the most important is the income from our own consultants. We had an increase of 18.4 percent last year. It is interesting to see that with a general increase of 16.5 percent, the growth comes from our own employees. The most important factor for the increase is the decline in the number of employees, which has increased by 9.8%. That means that we have become 232 more in the last 12 months, and 70 more from Q4 is an important factor. Another positive effect is the increase in hourly rates, which has an increase of 7.8%. The fact that we have achieved hourly rate development has been fun, but at the same time, many of our agreements have been adjusted over the new year. As mentioned, we still have high demand from our customers. They still buy the width of our services, and we have a high rate of turnover. Compared to last year, it has gone down by 3.1 percent points, but last year it was extremely high. In addition, this quarter we have had one extra working day. If we look even closer at the change in income, we see that we have got 9.8% more employees, which has given an increase in income of 74.6 million. The hourly rate has had an adjustment of 7.8%, which has given 59.3 million. And the extra working day has given 11.9 million. This reduction in the percentage of 3.1 percent points has then had a negative effect on 26.9 million. From now on, we have looked at the income and the operating income. As mentioned, we had an operating income of 131.6 million, which is an increase of 7.2 percent compared to last year. The operating margin was 13.9 percent. And the total operating costs have increased by 18.2% compared to last year. And you can see that compared to last year, it was a pandemic quarter. So that has affected the costs, so to speak, the pandemic costs. And then there has also been a general average increase in annual income of 0.7% over the last 12 months. And this is interesting to see in relation to hourly price development at 7.8%. If we look at other operating costs, we have had an increase of 55.7%. We have had an increase in costs of 99.8% when it comes to travel, courses, social events and recruitment, with a total of 29 million. I would like to highlight two areas, in addition to travel, where there has been an increase, and that is in competence development. We talked about the fact that there has been a lot of technology development in the last quarter, and in addition to this with social arrangements such as Bovébånd, which has been carried out in all regions in this quarter. This is extremely important for us to have, that contact with colleagues, and to look at both the professional and the social together. The other elements of the discussion have increased from 34.2% to 39.8 million. And this is generally linked to the fact that we have more people. If we look at the impact of changing income on the DRIS result, we can see that the increase in the number of employees by 9.8% has given a positive effect on 23 million. The biggest effect this quarter is the increase in the hourly rate by 7.8%, which has given an effect of 38.8 million. And one more day has given a positive effect on the result of 7.7 million. And then we see that this reduction in the rate of return of 3.1 percent points has given a negative effect on 17.6 million. So finally, the cash flow from the company, which was at 138.8 million this quarter, and which is an increase compared to last year, which was at 90 million. In the last 12 months, the flow rate has been at 370.2 million. When it comes to the flow rate for investments, it is negative at 15.9 million. That was the numbers. I will give the floor to Gunnar again to look at the outlooks.

Yes. The outlook is quite similar to what we shared last quarter. There are some big drivers. I have talked about them throughout the presentation. Energy, transformation, green shift. Everything that concerns the security situation in Europe, not only affects the defence, it affects all customers. So this with attacks and so on, so that we develop safe, secure solutions, that is an essential driver. And then, something that I have shared in the customer presentations, is that the movement and the importance of data and information and analysis and the use of data in the business is becoming more and more important. It drives a lot of the underlying needs for us. It is not only technology, it is also organization and change management and so on. And it's impossible to talk about the quarter Q1 2023 without saying anything about rapid technological development. We wrote in the report that what we understand today is the history of tomorrow, and the debate and the focus that has been around artificial intelligence, we think will only get stronger. So it just underscores the need, as an example, for the importance of competence development and that we continue to invest and work with the development of competence for the future. And then we have the economic climate, and it is relatively difficult to interpret, because at the same time we have an enormous demand. We hear about other actors in the industry who experience more on the body, what happens in relation to exertions and downscaled activity. We have already started to notice the effect of this. In some areas, the flow of experienced competence has improved. So this has both challenging sides and positive sides for us. When all that is said, we are extremely optimistic for the future. We believe that things are happening in relation to some downscaled activity in some places. Perhaps we have experienced some within the public sector in more project-related areas, while technical services and technical services and project services, which we are in the most important stages we have described here, there is no downscaled activity on that. So it is difficult to predict the future, and we do little of that, but we are optimists and look forward to the coming quarters. So that was what we were going to share. We are open for questions. Espen?

um This is something we do bi-annually, so every other year, is that right?

No, we do it twice a year. So we have the most beautiful adventure of the year, and then we have the autumn adventure.

Okay, so when it was held for example in the first quarter, the money you spent on that is then loaded into the budget in the first quarter, right? That is correct. So it is not periodized over the year? No, not on that. And then there will be a new round in the third quarter. Is that right?

Yes, that is correct.

And what does this do, if I understand correctly, in relation to these operating costs that have increased a lot? What does this investment do? Because you have to look at it as an investment.

Yes, yes, it is an investment. And now it is the case that Boway One gets perhaps a little undeserved attention, because we do a lot more than Boway One. So we actually use a lot more money than you ask for. on competence and division. But what this is about is that we use the locations we have. We may rent some locations, like here in Oslo, we rent the Storsalen Colosseum. So it's not terribly expensive. And then we gather here, and in all the meeting rooms there are parallel sessions. And then we stream it between the offices, and then they have similar concepts in the other premises and regional offices. So that means, it's actually a fairly low cost profile. This is about competence sharing, and then it's food and drink, and then we might have a large hall somewhere.

I understand. Can you say a little more about the fact that these operating costs have grown so much? I understand that it was a pandemic a year ago, but can you say a little more? Because the number of employees has increased in size, is it 10% or something like that? It's not so easy to... Can you say a little more about these?

I can say it as I ask those who know the numbers, and the answer is that we are at a level that is more normalized from pre-pandemic times in relation to all employees and so on. So that means that the development you see, which can seem scary in percentage, has not exceeded the level we were at, for example in 2019, before the pandemic hit. And then there are some of the costs that have not come back fully. Travel costs, for example. Something a little different.

Thank you.

Yes, Thomas?

I'm just looking at the summary. If I look at the other operating costs, Yes. I don't have any other information that would provide any other answer to that. Great. And one more question, if I may. The rate of invoicing has dropped, and that's because it was very high in the same quarter last year. Was it also very high in Q2, Q3, Q4 last year, so that we can expect the same development in the next quarter? Or was it not as high in those quarters a year ago? It was relatively high.

It swings a little bit, but it was very high in 2022, from what I can remember now.

I'm not surprised to see that there could be a drop in it in the next few quarters.

Yes, you should be aware of the factoring rate and the activity we have now, it is high. We are a little careful to say what will happen in the next quarter, but we have high activity now, so that will determine how these times develop, which I'm talking about, which can be a little uncertain, how they develop, that's what can affect it. But otherwise we will have enough to have high activity.

And it can also be said that even if it is down by 1%, it is still high, the rate of invoicing. Yes.

It is probably so that we say that it was extremely high compared to the quarter.

You are active today, this is nice. Now you have described that there has never been an increase in the number of employees in the last 12 months, and 70 now in the first quarter. How does this affect the billing ratio? It must take some time before the number of employees increases.

Up to speed? That is a very good question. And it is also completely correct that when we get so many new employees in, it is of course a lag that they are out in invoices. I'm not going to say a number on that, but I can say that what you see in BoV, is that the years we have worked with this, from 2015, that part of the business has become quite professionalized. So that means that we are now standing with a very short time from when people come in until we are out on duty. And it's about working with a long time in advance and preparation of that. In addition, the combination of skills is quite important. The experience and the new graduates. This is a quarter where we do not have a large number of new graduates. So this is a quarter with a large number of experience. The third quarter is a quarter with a large number of new graduates. So it varies a little per year.

I had a question, and I understand that there is a lot to do, and it's going well. And then it's difficult to predict the future, but we still know so much. So I'm thinking about this with the old wave and health services in Norway, Without digital, it will probably be even more difficult. Should it be a strategic area of investment over time?

Health is an area we want to strengthen. I completely agree with you. We are facing a huge wave. We have a certain activity in health, but we work with it structured. We want a greater footprint. So if I were to wish for two things when it comes to sectors that I would like to see us strengthen further within, I would say health, but I would also say industry. Because what the industry stands for is also incredibly exciting. And we have shared that with some customers. We will probably share more about health in the coming quarters, I hope.

Hi, Alexander Lager from Arctic Asset Management. If you look at the operating results sequentially from Q1 to Q2, some years it is quite flat, and in the second year it goes down a bit. Can you tell us a bit about the season effects that you can expect there, and what that might look like this year?

This is related to the autumn. when it falls, and this year it's the Easter in Q2, so that will affect the results and the turnover of activities.

Vedderne Framtiden has taken a step towards health. We have read in the newspaper for a long time that many politicians are not happy with what they call so-called welfare profits. It is known that when they wanted full childhood protection, there were private actors who invested in kindergartens and were great contributors to get the childhood protection up where it should. Many private companies have been unhappy with the fact that the authorities have come up with a different type of communication around this. The whole health sector, since this is something you want to get involved in, there is a big difference in the industry on the one hand, due to the problems I'm facing, and health, which is largely public. What have you thought about this problem?

We are very much in the public sector. We have a lot of experience working in the public sector, and the commitments we have in health are very much linked to the public sector. That would be our main focus. We have agreements today where we work with health companies around all health companies. And what is important there is to win contracts with them and continue deliveries there. We have shared here how we have won contracts within health, and then publicly. New hospital, new nurse in Tromsø and so on. So it's that type of customer who needs the whole spectrum from BOV, both especially the design and service and patient travel design services and project management and advisory services. That is especially what we see the potential for in health. There is also a potential for technical services, but it is a bit different from some other industries. They buy more standard applications and there are more integration services. So the combination of the competencies we will deliver in health is probably a little different than what we deliver to large large-scale projects on the customers we have already described. No more questions? You have to come here every day, I say. At least every quarter. And then we have to take a round like that. But thank you very much for participating. And active questions and active questions round. And thank you very much to those who followed me on the net from the office or from the kitchen table. I wish you all a really nice day.