Bouvet ASA

Yes, then I am looking forward to welcoming you to the presentation of the results of the third quarter in Bove. My name is... You can just come in. Welcome to the third quarter presentation. My name is Per-Gunnar Tronsli. Today we have a little change of staff. With me today is Steffen Garder, new CFO at Bove. Steffen came from the position as CFO in Sveco Norway and started with us on September 1st. So we do the same division. I will talk a little about what we have done in the quarter. Then Steffen will say a little about the numbers. And then I will come back and say a little about what we see in the future. We are doing this here in Sørkedalsveien. We are very happy that there are so many of us. And we are on stream, so the way we do this is also the usual way. We run the presentation and the process, and then we take the questions at the end. And then those who are on stream also get the questions. So, the third quarter of 2024 was And it became a quarter we are really proud of. It became a real Bovee quarter. We increased our operating revenues by 100 million to 878 million kroner. That is a growth from the same period last year at 12.9 percent. Then we increased the operating revenues. It came in at just over 100 million, 101 million. And that is an increase from 80 miles to an excess of 26 percent. We are very happy about this, and proud of it. And then, the third quarter is a quarter where we get many new employees, so we got 58 new colleagues. this quarter. And then, on a 12-month period, there is a rate of 120 new employees in BoV. And not unambiguously, he decides to manage, and based on the financial situation we have in the company and future prospects, to pay an additional exchange rate of 1 kroner per share. A really good quarter. I am very grateful to be able to stand here and talk about it. There are many residents who have worked late and early to get to this, so I would like to say thank you to all those who have contributed to this. That is almost 2,500 residents. So thank you all very much. We have an ambition, which is that we are a society where we put people in the centre. This means that we have a great focus on building strong communities. And that is a community that is about building competence, sharing competence, a good working environment that should be built under good conditions, and in addition, we try to have it as fun as possible. This quarter we marked this community, we usually do it in the third quarter every year. Last weekend in August or first in September, we often went on a trip all together. This year we gathered the whole company. That's many years ago we have done last. Then we gathered everyone, and then we had our own Bove Øya festival. So then we mobilized everyone in Bove, and then all our house bands, and lots of artists. And then we had a real marking of the Bovee community at Odderøya in Kristiansand. And the pictures you see here are from that marking. There was no sun all weekend, but there were many happy people. Now I'm going to go a little deeper into the numbers. We have always had a good balance between public owned companies and private owned companies. This balance has always been a bit off, but it has also given us a very good balance. A good balance that has led us through different times. What we could talk about last quarter was actually a bit against the flow in relation to what you hear around the market, but we could talk about a strength, a growth within public owned companies. And that development has only continued this quarter. What is underlying to that development is, we wrote about it in the quarter report, there are two fundamental traits in our social development now, and that is the focus and importance of energy supply, electrification of the entire society. And then you have another underlying important factor, trend, and that is security and defence. This means that the public ownership companies are within those sectors where we see growth within the public sector. And that is quite significant. So the public sector for us, or public ownership companies, grows by over 20% from the same period last year, where we see that the private sector has about 6% growth from the same period last year. A little down in the matter, I will just mention the three largest sectors. We see that in energy supply, if we go back to the same period last year, it was 16% of our relative turnover, so we see a relatively significant increase. On oil, gas and energy, we see a relative decline, down from about 44% to 41%. And then, within the public sector, there is both public business and defence. It is on the same level, relatively in terms of turnover, And the reason for that is that we have, as many others report, we have had a decline in a part of the public sector, but we also have a significant strength within the defence sector. And that is within that sector. We have a relatively fine growth in services, but that is from low numbers. So, In these quarterly presentations, we want to talk about what creates these values. The numbers are still results of a value creation. So I want to pick up four companies and suppliers that we work with, and tell you a little about what we do in Bove. The first one I want to talk about is a company called Locus Solutions. Locus Solutions delivers IT solutions to the transport sector, logistics, and social security and preparedness. What we work with Locus together with is to create national emergency numbers in Norway. And especially then, there is a national emergency number for fire, and that is 110, as we know, and there is also a national emergency number for Amk, i.e. Ambulance Health, 113. The goal of these projects is to coordinate all emergency number handling in Norway. And it's about... Good morning. And it's about solutions that, when we call 110 or 113, it's from reception and registration of the event, to recruitment and dispatch of the right aid to the event. Right now, the solution for fire is under development, and fire in Norway is managed by the municipalities, or the municipal cooperation, which is state-owned, so it is the health regions. But the solution for fire is under development now, and the solution we have been allowed to use to build it actually got its spark here in Oslo. Not long ago, we had an incident with a trigger detection, which I think all of you are familiar with. The story goes that just one and a half hours before the trigger detection happened, the solution for fire was put into operation. It received a fire alarm here in Oslo. The flying colors went very well. Fortunately, it went well in all ways. But that is the solution we work with, together with Locus. And then this will be rolled out throughout Norway. And after a while there will also be emergency numbers for the IMK ambulance. Then we have a customer we have been allowed to work with for a very long time. The environmental directorate is a customer we have had since 2001, and the current agreement we have with the environmental directorate extends all the way to 2027. We have been working on this for a very long time, and the environmental directorate's social task is of course to manage Norwegian nature, limit and work towards forest cleaning and climate emissions. We deliver a large number of services to the environmental directorate, and services where we have delivered, where we deliver the entire team management, development, design, testing and management. Right now, we are working with things that are about the environmental directorate having an ambitious plan to move most of the solutions to the sky. We are working with the modernization of all these solutions. And then we work with the data platform for the Environment Directorate. Here there are many specialized applications that collect data and make it available to us as users and to public users. In addition, we have got a new customer here, because the government decided that what is called sustainable species, It will be moved from the environmental directorate to the agricultural directorate. So that means that right now we are working with the moving of solutions such as the garden wilderness and the management of the garden wilderness and hunting information and in that category to the agricultural department. So exciting customer gives us many opportunities. We work in the BOVE team on a large spectrum of different solutions. So it's a fantastic customer and popular among BOVERs to work on. Then we have a customer that we have been allowed to work with since 2006, and that is Hydro Aluminium. Now we have a new agreement, a renewed trust with Hydro. So now we are their leading partner in everything that concerns system development services and related advisory services. What we are working with here is the use of IT and technology closely related to metal production. This is exciting, it is of course important and meaningful. This is about building a sustainable Norwegian industry through the use of modern and future-oriented technology solutions. So, a very exciting customer. I work a lot with them, especially in the Haugesund region. And then I would like to highlight one last customer, and that is a new contract. NAV is one of the largest IT buyers of IT consulting services in Norway. Historically, we have made smaller contracts for them. We have been talking about smaller contracts over the years. Now we have got agreements. NAV has established some parallel framework agreements with several, and we have submitted agreements within some important areas. We have submitted agreements within what is a multidisciplinary development team, that is, when NAV buys in consultants to command their teams to drive modernization and further development of their solutions. It is a contract that has a frame of 2-3 billion kroner over the next four years. So it is big. In addition, we have got a contract on what is called Agile Coach. When you think of Bovee, you think of us as technologists, and that is correct, but we have a large part of our business that is about team management, project management, everything that is a little softer subject, just to drive that technology development. And Agile Coach, it's about services that are about how you run what is called a smooth, agile team in a good way, how you run management and team work on it. It is a contract that has a frame of 70-100 million kroner. And together with a partner, we also won a contract on data communication, platform and data communication, which has a similar frame. There we work much more technically on operational support and special skills on a number of different technologies. All these customers ensure that we have a lot to do in the future, and we are very happy to get trust from NAV. NAV also has a technology platform that is largely Java-based. Java is the parallel to Microsoft. Important for us, we have a large other customer that is Java-based, and that is Statnet. So for us, this is an important step for a new customer to grow and develop on. That was the customers. Last quarter, I could tell you that we were on the list of the 10 most attractive employers among IT students. And this quarter, it fits quite well, and I could tell you that this quarter we ended up on the list of the 10 most attractive employers for all experience categories. This is important for us. Not necessarily to fall on these lists, but what it tells a story about. We work pretty hard every single day to create a working environment, work with things that are meaningful, have a working environment that attracts people, that develops people, that makes people want to be in Bove. And then we think that this is a nice recognition from outside our walls that it is seen. And then this is something you will never be done with, you will never reach a goal, but it is nicer with recognition, so we take it with us. Then we hope that prospective new employees see the same and think the same, so we get even more colleagues. So this is important to us. A little more about our sectors, and which customers we work with, and where we see growth and development. Oil and gas, renewable. Growing, as I said, a relative change, we went back a bit. But growing still, slower than what we have seen before. Some times here we have talked about much sharper growth in that area. But that is especially in customers like Equinor, Aker BP, and to a certain extent also Gasco. Then we have energy supply, and energy supply is the one that drives the most of the growth we've seen so far. It's where things are going fast now. And this is about the electrification of society. It's about energy cooperation with Europe and with the UK. It's about foreign cables. It's about balancing our networks. And then there are companies, of course, like Statnet, own, manage and develop the national network. But there are also companies that deliver services to you and me. And those are companies like Skagerak and Eidsiva. So those are the companies that are most understated of the growth we see in the sector. Then there are the public. What shall we say? In Bovet terms, it is moderate growth. We are also not untouched by the situation that many of our competitors are talking about. There have been changes here, so what is in this sector for us is a strong growth within the defence sector. We have also seen a decline in other customers in the public sector. But the defence stands in front of big promises, big investments, a big political will to invest in the defence. So we put a huge price on being able to participate. Then you have the service sector. It accounts for a relative 5% plus of our turnover. Nice growth, driven a lot by one customer that I was looking forward to talking about here. It was perhaps a year ago, and that was that we had gained trust in Innovation Norway. And that has become a very large, exciting and interesting customer to work with, so it contributes a lot to the positive development we have had within the service sector. But also customers like Røde Kors is a customer that we find again within that sector. And then, something that continues to strengthen itself. I got questions about this. It's like this with analysts, that you search for things to see if there are any things to dig into. And this with our customer concentration is something I get questions about. Our answer to that is that this is one of the most important drivers for the development we have seen in Bove. We have cooperated closely with some customers over many years. This means that we learn the business to know. We get trust and we take responsibility. This means that there will be long-term customer relations. And when these customers, in addition, are in sectors where they need a lot, or have great ambitions for digitalization, then the outcome becomes like that. For us, this is a desired and controlled development. It gives us even more interesting tasks and educational tasks. And then we are even more closely connected to the business, to the customers. And then there is another thing about it. I'll jump back a bit there. There is another thing about it. It means that in an environment like ours, we do not have unlimited capacity. And that means that we largely prioritize our existing customers. And then the answer is like this in relation to new customers. And here I would say that the main part of what has been of new customers is Innovation Norway and sharp growth on that one customer that we have chosen to prioritize as a new customer. This has been quite consistent over many years, many quarters. When you come here, you will hear that new customers make up between 96 and 97, or existing customers make up 96-97% of the quarter's turnover, and then also this. I don't think there is any reason to expect anything else either. That is something we prioritize. Then we have our business around the country. We have always believed in and we believe in building competence locally, approaching customers locally. This means that all these regions that we have in Bove are a little different. Here there is a high degree of autonomy and they adapt to the opportunities that are in the different markets. If we go back one year and look at the map then, we will see that we are again at the 120 number that I shared. Then you will see that the growth we have had in the number of employees has been in especially two major markets. It has been in the market that is here in the east, which is Aksjøs, Buskerud, Inlandet and Region Øst, which is here, Oslo, with about 50. net growth, and then you have the same in Rogaland, and the rest is spread evenly in the other regions. And finally, before I give the word to Steffen, we have this with the number of employees. I said this is a quarter, this is in many ways, as we wrote in the report, this is in many ways the quarter of the employees, because it is This quarter, we are looking forward to welcoming a number of summer students. We are welcoming many new employees this quarter. We have a strategy that when we recruit, we want to recruit a mix of experience. We want to be a company that is well composed of experienced people and people with less experience, so that they can learn and grow. and grow with the tasks. That's how it was this quarter. We got 58 new net employees. And as everyone can see, in relation to the pace, in relation to 120, it has been somewhat down. That was the previous quarter as well. And then it is ... If we take a little look at the market, we see that this has been a time when there has been a lot of uncertainty around what the needs and demand should be. We have seen a lot of our competitors and other actors in the market, that decline in the number of employees. We report that we are becoming more. In BOV, we also use some words. We use the word gas. We rarely say brake, but we say easy on the gas. And there is no doubt that this year we have been very attentive to giving gas where we see there are questions and possibilities and needs. And then we have eased a little on the gas and been a little disruptive in a number of other areas. And that's what you see in the numbers. I both believe and hope that the future is good for us and for the industry, so there is room to give even more gas. We'll see. That was a little about what we have been doing. So I'll just give the floor to Steffen. Here you go.

Thank you. This is where the excitement begins. Thank you, P. Gunnar. Now we'll take a closer look at the figures. As usual, we'll start by looking at the key figures, then we'll look at operating revenues, operating results, and then we'll end with some cash flow. In the third quarter, the operating revenues were 878.5 million kroner, up from 777.9 million kroner, an increase of 100.6 million kroner, or 12.9%. In the same period, the operating result ended at 101 million kroner, an increase of 26.2 percent compared to last year. The operating margin is 11.5 percent, which is an increase of 10.3 percent compared to the same period last year. Other key figures with major changes, as you can see here, are Net Cash Flow Operations, which in the quarter was 140.6 million, while it was negative with 117.4 in the third quarter in 2023. I will come back to this later when we look at the cash flow, but I can already mention that it has to do with a calendar effect, that the last day in Q3 2023 was on a Saturday, so I can come back to that later. Accumulated, we had a revenue of 2.895.4 million kroner in the first nine months of the year, which is an increase of 13.3 percent. The operating revenue in the same period was 371.5 million kroner, an increase of 23.5 percent compared to last year. And it has given a operating margin of 12.8% after nine months, up from 11.8%. If we look further at the operating revenues, they increased by 12.9 percent, primarily from our own employees, whose turnover was 792.3 million kroner, an increase of 14.3 percent towards the same period last year. The turnover from our own employees is 90.2 percent of the total turnover. In the quarter, the turnover from subconsultants has been stable and accounts for 73.5 million kroner. The relative share of turnover from subconsultants has dropped from 9.4 percent to 8.3 percent in the quarter. As before, we primarily want to develop the company with a fixed number of employees. Other revenues amounted to 12.8 million kroner, a growth of 12.4 percent. As mentioned, the turnover from employees in the quarter was 792.3 million kroner, an increase of 14.3. Let's take a look at the drivers behind this development. The number of employees, as Gunnar has already mentioned, increased by 6.6% to 2,389. The hourly prices have increased by 5% compared to last year. This is a good follow-up to the WHO's range of services, and the factorization rate has increased by 2.5%. In addition, this quarter we have had one more working day compared to the same period last year. Two days in July, and one day less in August, so this quarter is one more working day. If we calculate these drivers in kroner and ører, this is the picture we see. The increase in the number of employees with 6.6% has led to an increase in turnover of 46 million kroner. The increase in the hourly rate of 5% has led to an increase in the turnover of 35.4 million kroner. The factorization rate went up by 5%. It has had a positive effect on 21.7 million kroner. And then there was this extra working day, which has had a positive effect with 10.8 million kroner. It is very important to remember that It is on average one working day in the quarter, which is 10.8 million kroner. But since it is an extra working day in July, where we have a lot of vacation, you also have to look at the farthest box there, which shows a negative effect of 14.6 million kroner. That means that it has taken a lot of vacation. So the net effect of that extra working day is close to zero. And then there is the last one, the other effects. As I said, there are holidays, sick leave, permits and so on, which had a negative effect of 14.6 million kroner. Then we move on to the employment data. In the third quarter, the employment data was 101 million kroner, which is an increase of 26.2 percent compared to last year, which was 80 million kroner. This gives an employment margin of 11.5 percent, which in the same period last year was 10.3. The total operating costs have increased by 11.4 percent compared to last year. And there has been a general increase in annual wages by 4.5 percent over the last 12 months. And the quarter is to a small extent affected by the increased unemployment rate by 5 percent. So we see the same graph, but now we look at the drivers and what they mean at the bottom line. The biggest effect this quarter is the increase in the hourly rate of 5%, which has given a positive effect on the operating revenue of 28.1 million kroner. The increase in the turnover rate to 2.5 percent points has had a positive effect on 17.3 million. The increase in the number of employees with 6.6 percent has had a positive effect on 13.6 percent per quarter. And then again, the extra working day, as you can see here, The average for the quarter is that one working day gives 8.6 million kroner more on the bottom line, but you have to see it in relation to the fact that it has been a larger holiday. So again, we see that that day is being neutralized. And then there are the other effects, as I say, progressive projects, health care and permits have had a negative effect of 6.1 million kroner. And then there is the cash flow. which in this quarter was at 140.6 million kroner compared to negative 117 million kroner in Q3 2023. If we look at the graph above, you can see that there is a big jump from the third quarter to the fourth quarter. As I started to say, the last day in the third quarter was a Saturday. So all the money that fell on Saturday, all the money came in the week after, which means that it came in in the fourth quarter. That's why it splits it up. So the third quarter of last year was perhaps artificially low, the fourth quarter of last year was artificially high, so that's why the delta is as dramatic as it looks here. In the last two months, the cash flow from the business was 707.7 million kroner, and when it comes to the cash flow from the investment, it was negative, with 5.5 million kroner. That was a quick review of the figures, so back to you.

Thank you. Yes, some reflections from the time we have in front of us, we think, we are optimists, but we see There is still a strong demand in the sectors that we have talked about. When we look at all the commitments we have there, we believe that it is a development that is just continuing and will in some degree also strengthen itself. So we are very optimistic about that. Then there is a small stretch that we see. We are talking about linking partners in more strategic alliances and long-term partnerships. This industry has gone through several twists and turns. What we are experiencing now is that there is a great demand to link partners, long-term, and partner alliances. So a lot of what we are seeing now is big offers, that plays on the power we have and the breadth we have, but also the opportunity we have to bring partners in large numbers. And we think that's a trend we've seen over the last quarter and perhaps the last few years, and we just see it strengthening. And we think that plays well into the strategy, the grid, the size, the power and the diversity we have. And then I'm on the cross-examination. Actually, the entire competence spectrum of BOV is being questioned. So we are also optimists. And then we have... We work a lot, but a lot is happening in our industry. AI is one of them. A lot of other things are happening as well. But we invest and engage in a lot of new technology. Specifically in AI, we do a lot. We do a lot together with existing customers in early implementations. So that's important to us, and we believe that this is something that will be more comprehensive for everything we do. It's not one dramatic thing that comes in as an addition, it's something that will actually comprehensive everything we do. But we believe that with the skills we build there, we are well positioned to take those opportunities. And we work very closely with some selected partners, and especially a partner like Microsoft, which is far ahead on new technology and AI in particular. So we invest quite a lot there. And then there is something that I am incredibly happy about, and that is that we experience reduced turnover. We are in a time now where we see that turnover has been falling over the last few quarters. This is a trend we are working hard to maintain. It creates peace in the organisation, it creates peace in our deliveries, it creates continuity in our deliveries and customer teams, so there are an incredible number of good effects of that. And then you can work with everything you build, it actually gets an effect. So that summed up, we experienced being in a good place and in a good development and in a good time. So those were the thoughts we were going to share today. So then it's open for questions. If anyone has questions.

Hi, congratulations on the result. Can you say something about your business in Sweden? How is it going? What are your plans for the future?

What you see from the numbers, I didn't comment on that, but if you had seen from the same period last year, we had a decline in the number of employees to 20. So that means that we haven't achieved what we want in Sweden. So what we have done this year has been to... We have become a few fewer. And then we slowly build on it. Little stone by stone, as we have always done. But there is no doubt that we do not mean that we have not succeeded there. And there are many reasons for that. Here in Norway, then we are a different ecosystem. We are big and strong, strong in judgment. In Sweden, we are a small player, and we have been able to benefit from that. We have won some interesting agreements there, and we will continue to work and build the organization from that. And then we'll see what other opportunities that have to open up there. But we are there, we have an ambition to be a Scandinavian IT consulting company, and it is there. Thank you very much.

After my calculation, the rate of invoicing is the highest it has ever been in the third quarter, now in Q3. Can you break it down for us? It may seem a little special from the outside, in a market that is weak, that the rate of invoicing is so strong.

I don't know how to answer that. It's under our belt. You can see that the rate of invoicing has risen significantly. And there are a couple of regions that have risen significantly. And that comes from... It's actually an assignment within the sectors I've mentioned. So without going any deeper on that, there are a couple of regions that have risen to be more on the same level as the other regions. And then there is a lot of progress in the tasks we have in those regions. But that is impressive. I don't quite understand how it happens, but it's going well.

Regarding positions, if I remember correctly, last year there were quite a lot of senior positions in the Q3. Can you perhaps compare some senior positions in the Q3 now with last year, perhaps on a relative basis?

Yes, on a relative basis, and I saw that a moment ago. The best position I have is about 50-50, with seniors versus new graduates. in August. And then it happens that throughout the quarter, yes, that is the August answer, throughout the quarter, there will be a larger number of senior experienced consultants.

Another question about your oil and gas segment. That segment was at about 15% in the first half of the year when you adjusted for calendar effects. 6% now. Is that a trend you expect to continue? That is, a slightly weaker growth from oil and gas, or is it more medium-term?

We'll see. I don't think we'll get back to the sharp growth we had earlier. I have calmer expectations for that growth. Maybe what we see now is more realistic in the long run.

So one last question, if you could compare the outlook you see when we are standing here now with what you said and what you saw when we were here at the Quito presentation, what would you say?

It is the same, and I hear that industry actors around us are more optimistic now than they were when we introduced Q2, because then there were quite grim views from many. So if I'm going to listen to them a little, I have to say that Q2, I was very optimistic. I'm very optimistic about our way now. If there are more who agree that there are optimistic views, then I think that's good. But I'm very bad at that. Yes? If there are no more questions, then I think we'll wrap it up. Thank you very much. I'm very happy for all of you who came here. It's very nice. And I'm happy for all of you who follow us. Thank you for following. And to all the residents, thank you very much again. A great quarter. We are both proud and happy about that. Thank you very much. I just want to say thank you for now.