Bouvet ASA

Let's get started. I'd like to welcome you to the presentation of the results of the second quarter at BOV. My name is Per Gunnar, and I have with me Steffen Garder, our financial director. We're doing this in a completely unusual way. I'm going to talk about the business, and Steffen will talk about the numbers, and I'm going to share some reflections on what time looks like in the future. Welcome to those of you who have come here in Sørkedalsveien. And welcome to those of you who are on stream, who are sitting around. Welcome. Hi. What we have behind us now is the second quarter of 2025. a good and strong quarter for BOV. What characterizes this quarter is good results development and a number of new contracts. Contracts with companies like Equinor, Ake BP, Skatteetaten, Banenor, Statnet and Fifty. These are companies that have big digitalization ambitions, and it will be exciting to work with further. The operating revenues came in at 969 million kroner. That is down 3% from the same period last year. The operating result landed at 123 million kroner. which gives an EBIT margin of 12.7, compared to 13.5 from the same period last year. The number of employees increased by 0.3% to 2,337. Another important thing to say about this quarter is that when we compare this quarter with the same period last year, we compare a little apples and pears. Here it is Easter that comes in. So a more relevant comparison, we mean, in terms of seeing the development this year, is to see the first half of the year, this year versus the first half of the year last year. And Steffen will explain a little more about that. I would like to say that this is a good quarter. It is a solid effort that lies behind. And I would like to say to everyone in BOV who is listening, thank you very much for the effort. It is a great pleasure to be able to stand here and tell you about what we are creating together. We have ended this quarter by welcoming summer students to Bove. And this is a good time, because we welcome many young people who are at the end of their education and who come to Bove to work as developers, designers and project leaders. and they get to work under good guidance from a lot of committed residents. And most importantly, all of them are allowed to work on real solutions. So then we have a large number companies and customers of ours who are setting up and have real needs that they should work with. And then we have companies like Bane Nord, Lyse, Stavanger University Hospital, Haugaland Kraft, Venn Properties, Stavanger Concerthus, Eulers, Norsk Lærer Akademi, Verform in Meråker, Husbanken, AKBP and BoV. It is clear that summer students are important for those who get the opportunity to come to us and work with these solutions. It is also important for BOV. For us, this is first of all motivating and engaging, and it is also a good recruitment arena for us. But maybe more important than that, it is important for our society that we take the new graduates in and give them opportunities to get into the working life. So I would like to say a little extra thank you to the companies that stand up and give the opportunity. And they are not, as I said, real solutions. And if we just take one example of what they work with, then these summer students, and these are good people, they have worked at Haugeland Kraft, for example, they have worked with simulations of where it is most likely that there will be a power outage on the internet. And these are solutions that Haugaland Kraft has used in its operations. So this is exciting and good. Now I will tell you a little about the operations. We can start with something that is very important to us, people and recruitment. This is a quarter that has also been flat in terms of growth in the number of employees. We ended the quarter with 2,337 employees. And the average number of employees is up 0.6% from the same period last year. And in spite of that, this is a decline of 10 employees from last quarter. This is a natural backdrop for this. First of all, and this is very important for us to say, is that we have a low and stable turnover. It is one of the most important key figures we follow, so that is important. And then there is a trait we, I mean, we train a lot on, and we are quite proud that we master, and that is to adapt that speed in relation to what we see as market opportunities. We communicated last quarter that there was lower activity, and that has a direct impact on the recruitment activity we have. So what we see here is a direct consequence of what we have seen as market opportunities in terms of recruitment. Then it should be said, and we say a little about that in the report, we have won a lot of contracts, so there is reason to believe that there are opportunities in recruitment work in the future. So, optimists in relation to that. In relation to our sectors, there are not many changes from previous quarters. The four largest sectors are oil, gas and renewable energy, power supply, public and defence, and services. Oil, gas and renewable energy is held at a relative advantage of 39% of our turnover. In that sector, our biggest customer is Equinor. It is the customer we see the biggest activity with in the future, and we were out with a press release last week that you might have received. We have received a new contract with AKBP. We see great activity there. In energy supply, the activity we have on StatNet and FIFTE, where we see the biggest change in a positive way, increased activity, has been Skagrak energy and energy. And the numbers we see here, here you have the quarter effect that I talked about earlier. Public and defense. There we have high activity. And it is especially within the defense and within a customer that I brought up, which we won an agreement on earlier, earlier quarter, which is NAV, where we have the largest activity. Also very happy, positive development in Sweden's municipalities and regions, in our Swedish business. And the services, a small sector, 6%. Those who carry this are companies such as Innovation Norway, Viking and the Norwegian Church. Then a little about our customer pool. Our ten largest customers, and here we are also, in this way, this is a quarter that is comparable to previous quarters, because again, the ten largest are 67%, a small positive change, while the twenty largest are 75%. This has talked about many quarter progressions, This is about the development where we see large companies connecting long-term partnerships. We are very positive about this. It gives us an opportunity to understand the customer, to understand the domain, we get deeper in with the customer, we get more trust and we take more responsibility. Very positive, we think it's very positive for our customers, who we work so closely with, and it's also very positive for us, because it gives a lot of opportunities in terms of also being able to bring in new graduates into the deliveries. The division between public and private is perhaps where we see the biggest change, and we also saw that change at the start of last quarter. And then we see a constant shift from private to public. And there are two main trends that drive this development. And one is what I have talked about in a number of quarterly developments. That is the development within power supply and electrification of our market. So that means a lot of activity within power companies, i.e. net suppliers and those who deliver services to all of us. In addition, there is a focus in our society around defense and security. And there is the activity we have in the defense that stands for much of this development. So a shift from some movement from private to public, and then it is driven by the two underlying trends. And the last one, a lot to do with existing customers. Approximately 97% of revenue comes from revenue that we had on customers also in the second quarter of 2024. So that's a lot, and that's what the new customers have come to, which we may see more of. That's Startens Kartverk and Enova, which we work with a bit. But as you can see, all of our main activities are linked to some large sectors, to the 10 and 20 largest customers we have. We appreciate that. Then I would like to introduce four customers that we have done exciting things with this quarter, and where we have also received some new contracts. Equinor is a fantastic industrial locomotive in the Norwegian society. Equinor is also the largest supplier of energy to Europe. And the whole portfolio is oil and gas, and also the renewable. Bovee, we have been allowed to be a supplier to Equinor for more than 20 years. So we have been on a long journey. We have experienced Equinor as a very advanced company that sees the possibilities in digital technology. And there we have been able to build a lot of exciting solutions. And now with this agreement, which is a new agreement for the next ten years, including options, we also hope that we can take part in the journey that Equinor is now leading, which is in an exciting energy transformation. So we are both proud and humble for what we will take part in there. Yara is also an industry giant in Norway and internationally. Yara is the leading global fishing company. They have 18,000 employees and they have representation in more than 60 countries. Yara on Herøya. That facility is Europe's largest facility for the production of nitrogen-based waste products. We have done exciting things there. Today, in cooperation with Yara, Telenor, Volvo and Hive Autonomy, we have worked to improve the efficiency and work-life in the production plant. What we have done specifically is, if you have seen the plant, it is quite fantastic, nitrogen-based manure is produced into heavy containers. When it is packed, large loaders work with it and move the manure into the packing systems. It is a very demanding work environment. Both with sound and with air and much more. So what we do there, we automate that. So there we build in technology and work patterns that remote control the wheel loaders. So from that we had operators who sat in the wheel loaders in a demanding work environment, and burdening the working environment, operators and truck drivers are moved into the meeting room. and sits in the control panel there with food and coffee available in a much better working environment, and which makes it possible to drive much more effectively. An exciting project. It sounds like there is a lot of technology. There is so much learning and organizational development in relying on technology and understanding the framework for how that technology should work. So that is exciting, and not entirely different from what is done in many other sectors and industries. When we look at offshore, where you move the manned tasks into the country. Exciting. Then we have the tax state. And this is an important cogwheel in our welfare society. And what they work with is to ensure that taxes and expenses are paid in the right way. And here we are chosen as suppliers, one of some selected, on the new framework agreement for the tax state. And here we have won most of all areas. So there is a wide range in this agreement, and it ranges from advice, system development, IT architecture, design, and what we call user experience, i.e. how you experience, including those that deal with organization and change management. For us, this is an important agreement, not only because we have the opportunity to deliver on a full scale, but also because we have the opportunity and the tax state to deliver from many of the regional offices that we have around in the country of Norway. So I am very happy and proud that we have achieved so well. Then we have KS Digital. KS Digital is a wholesale shareholder under the municipal sector organization, or KS. And KS Digital, their mission is to contribute to digitalization in Norwegian municipalities and municipalities. The municipal sector has been characterized by the fact that there have been many fragmented solutions, and different municipalities, and then we speak from the very small to the large, have a very different ability to implement good infrastructure services. And KS Digital will solve that challenge. So then KS Digital will provide a set of services to the municipalities, and a set of services to us, the residents of the municipality, that we can use. And then that will be implemented and rolled out. in the country's municipalities. And what we are allowed to do there is to deliver a whole team that handles and builds the solutions that we all are going to use. So that's what we call a multidisciplinary team, which includes all those who know how this is going to be designed, how it is going to be used, how the technological platform is going to be shaped. and how this should be rolled out in the business. So full breadth, and then we work with solutions such as Min Kommune, concern message, work with infectious disease and digital leadership needs. So completely specific services that we will use as builders in the municipality. Again, it gives us a good opportunity to work very broadly for Norwegian municipalities and deliver on the entire breadth in Bove. So that was four customers that I wanted to share a little from. And then there is this with artificial intelligence. Before we started here, before the stream started, there was a bit of talk about artificial intelligence. And we can continue that now, because it is not possible to have a quarter's progress without addressing this. And this is a development that is going at a rapid pace. And we experience that our customers are very concerned about it, we are very concerned about it, and more than that AI becomes a thing on the side, we see how this permeates a lot of what we do. It will permeate what kind of tools we use, how we work internally, but it will also permeate how we deliver solutions to our customers and how we use that technology in many different types of solutions. So we work with the development and implementation of this with our customers. We work with finding the right applications for it, where they actually create business value, so it's not just about using technology. We work with competence learning, and we work with to set a framework for how it is used, and it happens in an ethical, safe and safe way. What I want to do is to briefly mention some areas of use that we do for different customers. If I call it chatbots and dialogue solutions, an example of a solution is what we have done at Colorline, where KI assistants are introduced in the customer center at Colorline. This gives Colorline a more efficient customer center management. faster information flow, faster language support, and a shorter time to find the right product and the right offer for the customers. In the same category, I had one up last quarter, we talked about career guidance for young people. And that is artificial intelligence used in the Directorate for Higher Education and Competence, which is about matching based on interests, look at the needs for competence in society and relate it to current education. So that is one application that is out there and that is in use. Then we work with what we can call more predictive models and operating support. An example is what we do at Statnet. We use artificial intelligence to predict imbalance in the power grid. That gives better decision support for the operators, and it's a step forward to fully automate it. Another example is the patient flow to the nurse in Stavanger. With artificial intelligence, we make forecasts for the number of patients. This gives a much better planning, reduced waiting time, better resource utilization of key people in the nurse, and it simply gives a better patient experience. We also work with tools for employees in LKM, which makes it easier to find the right documentation and handle and process the documentation. In the public sector and in court proceedings, I have previously talked about how we use artificial intelligence in court administrations, and that is in better court proceedings. Here, the main focus is of course safe and secure use of artificial intelligence. In the same way, we use artificial intelligence in Innovation Norway. And again, we use it in case treatment. Better case treatment, better, faster handling, and faster processing of documentation. And then there is a large area that we see growing up in very, very many sectors. And that is very easy to understand. There is a lot of experience summarization, end reports, It is extremely difficult to create learning from all these end reports. They happen in different parts of the organization, on different projects, at different times. It could have been two years ago, four years ago, it could have been yesterday. over all that information, find the patterns in experiences and be able to extract those experiences and use them in learning and improving the development of the business, that is demanding. Artificial intelligence is used in an increasing degree in such applications. And in the same way, in HMS work. Small and large events in many different, in great scope, in different phases, in different parts of the business, the ability to combine, find the patterns, and be able to, based on that, identify and implement measures. So this is a selection of applications that creates real customer value. That's what I was going to say before I leave it to Steffen. Can we take questions afterwards?

I've read both the report and the presentation, and you've written more about AI than before. You've written about contracts. Could you give us something that ordinary people understand a bit more concretely? Like the examples you've mentioned. Take that into account in later reports.

We can think about that.

Let's write a bit about what I was talking about.

And get a better understanding of where we live in the AR world. Yes. And what I'm talking about now is that it's broad in our entire customer base. So we work with this in many different ways. I don't think that's the best word we have to understand. No. And that's why we're trying to explain it. Yes, yes, we'll take that with us. Are you going to talk a little bit about the numbers?

I can do that. So we hope the vote will last all the way. Let's see here now. Now we're going to do a deep dive into the numbers. And as you can see here in the table, in the second quarter, we had operating revenue of 969 million kroner. The time-saving decline of 32 million, or 3.2%, compared to the same period last year. EBIT ended at 123 million. which is a return of 12 million, or 9.1%, from last year. This gives us a margin of 12.7%, which is 0.8% lower than the same quarter last year. If we look at the bro-analysis, we get a clear picture of what is causing the EBIT-downfall. The biggest negative effect comes from a lower factorization rate, which is 1.7 percentage points down. This results in a reduction of 20 million kroner. In addition, the quarter had one less working day due to the Easter, which negatively affects the result with 15 million. Adjusted for that one day, the result would have been better than last year. Holidays and walks in the quarter were also taken out, and the Easter was founded, and the 30th of June was a Monday, so many started the holiday on that Monday. This had a negative effect on the result with 6 million kroner. The staff cost only increased marginally with 1 million. The increase is due to the general wage growth, but this was partly counteracted by good cost management. On the positive side, we had a good increase in the hourly rate of 3.4 percent, which contributed to 30 million kroner. In addition, we had a small increase in the number of employees, 13 people, which gave a positive effect of 1 million. If we go back to the table, we see that the result after the tax ended at 95.7, which gives a result on the share at 0.92 kroner. So that was the quarter, and I can also relate to what Per Gunnar said, that the quarter, as I have been through, is strongly influenced by both the Easter, holiday and calendar effects. It also gives a slightly skewed picture when you are going to evaluate the underlying performance if you look at the second quarter isolated. This is why we think it is more relevant to look at the first six months in advance. In the first six months, the calendar effects are evened out, and the numbers become more comparable. If I briefly talk about the turnover after the first six months, it was a little over 2 billion kroner. It was an increase of 1.3 percent compared to the first six months in 2024. The EBIT result is at the same time 279 million, which corresponds to a growth of 2.9 percent. This gives an EBIT margin of 13.6, which is also higher than the first half year last year. Then we look a little more at the top line and the bottom line, but we have a more historical perspective. And then we see that even though both the turnover and the operating budget are lower than the same quarter last year, it is still the second best quarter we have had in recent years. Only beaten by the second quarter of 2024, which then had one more working day. This is largely due to the return of the calendar effect, which affects all revenues. The largest percentage decline is seen in revenues from sub-consultants, which is down 9% to 78 million kroner. The share from sub-consultants continues to fall. and now accounts for about 8% of the turnover in the quarter. This is completely in line with our strategy to develop the company with permanent employees. The turnover from own employees had a decline of 2.7% and ended at 875 million. This means that the turnover from own consultants now accounts for 90% of the total. A clear strengthening of the core business. The course business Another turnover also had a decline of 4.8% and reached 16 million kroner per quarter. And down here, the development in operating costs showed a decline of 2.3%, even though the underlying wage growth was 4.2% in the last 12 months. Then we move on and look at the cash flow. It looks like this. The cash flow from the end of the run, as you can see in the right corner, at 6 million kroner, compared to 100 million kroner in the second quarter last year. In the lower right corner, we see the details that explain the development. The quarter started with the bank's cut of 741 million. The company has generated a positive cash flow of 99 million, and we have IFRS 16 effects of 17 million. At the same time, the working capital has been reduced by 110 million kroner. This is largely due to seasonal conditions and calendar effects. Examples of this are the payment of holiday money and bonuses. The cash flow from financing activities ended at minus 338 million kroner. This is due to the total payment of the exchange rate of 308 million kroner to external shareholders. In addition, there was a buyback of own shares. IFRS 16 effects. Referring to leasing obligations, both existing and new housing leasing agreements, the cash flow is negatively affected by 20 million. Therefore, in the quarter, we have a cash flow of 384 million. And then I will conclude by looking briefly at the balance sheet. It shows that we still have a solid and robust financial situation. There is no long-term interest rate in the Gjeld. What you see in the Gjeld is the IFRS 16 effect. The equity capital at the beginning of the quarter was 18.7%, which is the lowest level so far this year, but it is mainly due to the spending of the exchange rate. The liquidity rate ended at 1.08, which is a good level considering the seasonal spending we have had in the other quarter. And with that, Per-Gunnar, I give the floor back to you. Thank you very much.

Now I will just share some reflections on what we see ahead of us. I would like to start with the first point, actually the most important. You who were here and listened to our first quarter presentation, you will notice that we talked about the fact that it was a tough start this year. What we have experienced through the last half of the first quarter, and actually the whole second quarter, has been a positive development. So when Steffen talks about the pace we have, half a year to half a year, he describes what we actually experienced in the second quarter. So those of you who have read our quarterly report will see that we are optimistic about the further development in Q3 and this year. So a good starting point, very good speed out of the second quarter, and we are optimistic about what is ahead of us in the third quarter and the coming year. Then we have, and I'm not going to dwell on that for too long, but what we have talked about for a very long time, how the actors who live there are actually what is sought after by large customers, a large breadth of services, a combined service portfolio. We experience this being sought after. In addition, it is sought after that you want that solidity and capacity among those large customers. So that is a development that we are happy about, and that we have seen, and that I have talked about in all of the quarterly presentations here now, that you have seen all of the big businesses that are linked to some selected cooperation partners. The question after the full breadth of BOVE, we believe is good. It is the whole breadth of the service portfolio, from the organisational and competence development, change management, to all the technical services we have. The bouquet there is the composition that we experience that the customer wants. And then there is a small underlying trend in addition, which Mikke is not in this slide, but which is an increasing degree of service orientation in contrast to pure head. The service orientation is a development that we embrace and are very happy with. It gives completely different ways to deliver, and we see that some of the agreements we have made here are much more service-oriented based. If you are head and CV, I will send you a CV, and you will say what is the correct CV. Or I will tell you what I will deliver to you. Not a single head, but a competence and capacity that we can scale up and that the customer can scale up and down more flexibly. Then we have, as I have mentioned, the increase or activity of artificial intelligence. Yes, it penetrates a lot of what we do. We think it will go through everything we do, in more or less ways. So we work a lot with our own competence development, our own use, and we work with that, as I have described, outside our customers. So that continues. And then the last point, strong competition. There are many here who follow the market. You have probably noticed that there are individual actors who have a bit of a backlash. It is clear that this affects the competitive image to some extent, so in individual competitions we feel that we have competitors who have a bit of a lead capacity, and this affects the competitive image in individual competitions. And that has been an increasing trend in this quarter as well. But all in all, we have come back to the first theme I will talk about, and that is that for the sectors where we have our main activity, we have an optimistic view of the future. We have experienced that 2025 has started a bit slow, and we have actually only experienced an increase in the programme throughout the second quarter. So with those words, we thank you for the opportunity to talk about this. And if anyone has any questions, we can take that. We may even have a microphone. So if anyone has any questions, fire loose. And I have some with me. I have with Steffen, and then we have with Lisbeth here. So we hope to be able to answer most of it.

Is it appropriate? Yes, it's appropriate. The whole industry that Bovee operates in, where you have Accenture as the largest international, and then you have others that are not rich and large, and then you have Bovee here in Norway, and then you have several others. It is an industry that, if we go back many years, 10-15 years ago, it was characterized by evenly high growth. in the market and most of the actors. In recent years, it has been tougher to achieve such growth for the industry, whether you analyze Capgemini or Accenture. Many companies are not so easy to get growth today, so the entire market is not where it was 10-15 years ago. On the other hand, you have the well-known Magnificent Seven, As far as I remember, if we go back 20 years, none of them had fire services, for example. then one after the other has come up with skyscrapers. And how these companies, which are gigantic, have developed new business areas, and you can say, reinvented themselves. So my question is, what does Bovee think about the opportunities to, in some degree, reinvent Bovee, to get more room for growth, As many of you might think would have been fine. No criticism of what it is, but if we're going forward, we have to lean forward and look at what we're doing, and reinvent bigger or smaller parts of ourselves, or we'll stagnate in the society we live in, where development is the only safe thing.

Yes, that's a very broad question, and it's clear that... I'm not going to comment on the parallel to The Magnificent Seven. That's a completely different business, product companies and so on. But of course, I agree with what you're saying, that we have to work with our own development. And I had a small method that we in our industry have delivered, Even if you may not have seen it so well from the outside, it has also been a continuous evolution. If you go 10-15 years back in time, it was very oriented around what I was talking about, very head-on. And that is actually the whole industry working very much towards much more service orientation. And I see that as a step in renewing ourselves. Regarding growth, we should not go far back before we see several of the companies you mentioned, including Bove, with quite strong growth. So I don't think we should conclude too quickly on that, but we have been in a period now where many have had flat growth. But in terms of renewal, it is clear that artificial intelligence renews us, it renews our competence needs, it renews what capacity we use. It is clear that artificial intelligence removes some tasks and gives many new ones. And then we have service orientation. I think they are the most important drivers for our development. Yes?

Oil, gas and renewable energy looks like it will fall a bit in the first half of the year compared to the first half of last year. Is it one and only due to increased competition on the supply side, or is it something on a special side?

It is clear that Equinor is a big customer of ours. And it's an industry under, how shall I put it, also great pressure. So it's clear that in Equinor's activity, it affects us. And it's clear that there we see, if I can put it that way, a little strong cost control, strong prioritization around and prioritizing the projects that give real business benefit. and value, then there is some flattening of that, is one of the reasons there. So, actually not something fundamental, there is very high activity in total, but some adjustments. And then we see what I commented on, that we got the agreement with AKBP. There we also see a company that has a very big digitalization ambition, precisely with Yggdrasil and moving a lot of tasks into the land-based, i.e. land control. So really not a complete picture where you see the same features everywhere. Yes? Yes, there is one more question.

August is an important month for new employees. Can you talk about how you have hired new employees right from school and how it has been in previous years?

We have continued to hire new employees. We think that is important. Without counting it, we have taken something less this year. And that is a direct consequence of some of what we experienced in the autumn and early this year. But we give gas to the newcomers. But it will probably be something less than what we have had in the strongest years of growth. But still, August is an important recruitment year for us. Recruitment month. We have already gotten a lot of people in the doors, so it's a nice month. But compared to the strongest years of growth, it is lower. But there is gas. Yes. If there are no more questions, we thank the team, and welcome back to Q3. Thank you.