Bouvet ASA

Good morning everyone, and welcome to the third quarter's presentation in Bove. My name is Per Gunnar Tronsli, and I have with me Steffen Garder. We run the standard procedure, so I will talk about what we have done this quarter, and then Steffen will go a little deeper into the talk. And then we have the opportunity for questions at the end, so we have a microphone, then we send it around, and then we hope for many questions. It's always nice to start with new contracts and agreements. And this quarter we have also received some of them. I will start by mentioning Aker BP. A big agreement. I will come back to it and tell you a little more about what we are working on at Aker. And then we have within the public sector, we have received agreements with Asker municipality, Trondheim municipality and the court administration. It is also very nice that it is perhaps the customer we have had with us the longest, for 28 years, and that was before Bovee was born. We have worked closely with Viking Rescue Service, and it is nice that they renew that trust. We look forward to many years with Viking Rescue Service in the future as well. We are also pleased that this quarter is a quarter where we have net growth in the number of employees from last quarter. On the economic side, our operating revenues came in at 871 million. That is something down from last year. We had a record year last year, so it's 0.9% down in turnover. And then came our operating results, down to 92 million, becomes an EBIT margin of 10.5. An average decline in the number of employees from the same period last year, but net growth from last quarter. And then, on the basis of the company's financial position, the board has decided to pay an additional exchange rate of 70 euros now in the fourth quarter. And then it will be collected for the whole year. So we had an exchange rate in the second quarter. So that's 3.70 euros. But that's 70 euros now in November. So I would like to say thank you to everyone who has stood behind this. It is Bovere who have worked early and late to create these results and support our customers in important tasks. So thank you all very much. This quarter we also mark the fellowship in Bove. Bove is based on the idea that it is the people in the company that make up the whole value. And we always say that the people in Bovee stand in the centre. We want this to be a company where people flow to, where people get the development, both professional and human, that makes us a good workplace. And that community, we still mark it throughout the year, but August-September is a period where we have a special focus on that. Then we travel, so also this quarter we have spent a lot of time and energy on being together and creating joint experiences and building on the community that Kjennetegner lives in. So Stor Stas, always in the third quarter in Bove. A little about the operations. It is a quarter where we have the net growth in the number of employees from the previous quarter. Compared to the same period last year, we have an increase from the previous quarter of 17 people, and we have a decline from the same period last year. And that is no surprise. Those who have followed us have seen that we have had three quarters where we have had a marginal decline in the number of employees, and that is what we see in the 35 from the same period last year. There is a pretty clear background for that. First of all, I would say that we have, and that I am very happy about, that is perhaps the key number I am most interested in, is that we have low turnover. And that development is a direct result of reduced recruitment activity. As we also write in the report, it is a market that is somewhat tougher on the competition. So we have always sought to dimension our recruitment activities according to what we see of market opportunities, and also this quarter. Our sectors. I will go through each of the largest sectors and talk briefly about what is underlying to that. Oil and gas renewable energy is our largest sector, and those who have followed us for a few quarters may have seen that it has been It has been in that size area. This quarter, 42% of our turnover is from that sector. What is behind there, we see, and we read that in the media, is a significant focus on costs and operating costs in Equinor. So we see something down there. And then we see an increase in what I talked about, the GDP, and we see our energy. So that fully compensates for the decline we have seen in Equinor. So a large sector that is actually developing well for us. Then we have energy supply. This is a sector that has always been important to us and stood for a size of 20%. As we can see here now, some are down. In that sector, we work with large customers such as Statnet, but also many who deliver power and services to us as consumers. And we also have power producers in that sector. What stands out in that sector this quarter is that the turnover is stable. The turnover is the same for most large customers. But we have had some power producers that have scaled down on activity, and that is what we see in the adjustment. Then we have public and defence. It has been a sector that we also saw positive and actually quite strong development within last quarter. Despite everything you hear in the market and so on. This quarter it is especially, I had up here on an earlier quarter presentation that we had got a new contract on NAV. It is one of the drivers behind the development in the public sector. And then there are other customers that I have talked about earlier, such as the Directorate for Higher Education and Competence, which is called HKDIR. And then we have, let's see, there was a customer, yes, Kystverket, and in addition also something that is nice, which is Solna Municipality in Sweden. And then we have the service providers. It is a large relative, but it is still a relatively small sector for us, but with a set of very important customers there. And what lies behind that positive development there, there are especially three customers, and that is Innovation Norway, and that is the Norwegian church, and then there is the customer I talked about, that we got the new contract with, Viking Rescue Service. It is what drives that development there. A little more about the customer and market relations. There is not much new here. Those of you who have been here at previous quarterly presentations, you know these development lines. The 10 largest stands for the 68% and the 20 largest stands for the 76%. We have commented on this many times. It is a development we have worked for and we are very happy with. It has given us a good approach with the customers we work with. we learn the domain well, we get more trust and we take more responsibility from those customers. And then it is also a sign that the customers we are with have quite significant digitalization ambitions. And that is also the background for this to have remained quite stable for many years. Public-private. Not much dramatic change there either. We had a positive development in the public sector. And that is actually similar to what I mentioned last quarter, when I talked about defence. But there is also what I mentioned with the increased activity at NAV, the Directorate for Higher Education, and Kystverket. That is what lies in that development. In the previous quarter, we have always been at 96-97%. We have a lot to do with existing customers. This quarter is exactly the same. It is behind the entire development, also among the 10 largest and 20 largest. We have a lot to do there. Very nice this quarter. Last quarter I presented a customer we have received a new contract with, which is KS Digital. KS Digital has as a goal to build services that will be used by the entire municipal sector. So KS Digital, together with the agreements I described with Asker municipality, Trondheim municipality and other municipalities we work with, means that the municipal sector sees a pretty positive development. This is again about standardization, and it is about building on the important role of KS Digital in creating standardized services, the municipality should take advantage of, so not everyone should do everything themselves. In addition, there is another customer, and that is Green Mountain. And that is probably nothing to expect. We are a large IT company. The data center has come to stay, so we are working on that as well. I would like to introduce three customers. Ake BP, we sent out a press release earlier this summer. Ake BP is a customer we have worked with since 2009, but on a different activity level than what we see now. AKBP, as we know them, is a leading actor in Norwegian soccer. They are operators in five fields, and they are also in Johan Sverdrup, where they have a larger share. Now there is a fairly large expansion of Yggdrasil, which is a large field where Ake BP has a central role. What is exciting about this development is that Ake BP is leading and they are going to build a field that is Yggdrasil and will be operational in 2027. And that is about remote control of the field and low and no load on the platforms. And then it says to itself that there is a lot of digitalization that needs to be done. And all this is to be controlled from a collaboration and operation center in Stavanger. So then we have an agreement with AQBP where we work with them on project implementation and implementation. And then we work with many aspects of the project, such as project planning, project implementation, a lot around change management and competence development, because this is about completely new work processes and completely new ways of working. So exciting. Very exciting and a lot to do for us, which plays on a lot of the breadth we have, which is both technology implementation, but also project and change management at Aker BP. Then we have Asker municipality. It is the country's sixth largest municipality, with 100,000 inhabitants. And they have an ambitious goal of building even better building services for everyone who lives in the municipality through smart use of technology. And then it's about a lot of cooperation, a lot of focus in Asker Municipality, but cooperation with external parties. And we are one of them, but it is also about cooperation with other parties, as I mentioned, KS Digital and so on. We have signed an agreement with Aske kommun over four years, where we will work with what is called programming, systematization and integration development. This means that we work with technology again, but a lot on project implementation and change management in Aske kommun. And again, as I mentioned, Aske is an important and large municipality, and together with everything else we do in the municipal sector, this is an exciting task for people in Bove. So I would like to present a completely different type of assignment that we are in. And a lot of what I am talking about and we share here, that we work with, has a very large content of technology. This means that we have programmers, program developers and technical staff who are working with technical implementation, construction and development of solutions. HelseVest, this project, describes another part of our service portfolio. Here we work with HelseVest in order to purchase and implement a new birth certificate system in HelseVest. And then we first work with concept research. We have worked with Health West in leading the entire planning phase, where we have worked with requirement specification. We have worked with finding a solution that has the right usability and quality of use. So we have worked with In order to implement such solutions, we work with the Health West administration and we have worked with the estimation of the entire solution so that it can be decided. We have carried out the acquisition of this solution and chosen suppliers. What we are in now, we are in the phase where we are going to implement this. So this describes a type of assignment where we do not work with the technical implementation. We work more with the preparation for the project, the implementation of the project and the implementation of it in the organization. So those were the three references I wanted to highlight. these days it is not possible to hold a quarterly presentation without talking about artificial intelligence. It is clear that artificial intelligence is very central to everything we do. It is central to our professional work. Artificial intelligence comes in the all-encompassing future to be a part of everything we do. So we work a lot with competence development throughout BOV. We work with our own use, how we should use and use artificial intelligence with us. And then we work a lot with with our customers. And this is a lot of interest, curiosity and some early implementations of technology. With our customers, artificial intelligence makes us able to create solutions that we previously could not. So that's positive. It should be said that many of our customers now are very concerned that we are perhaps over a little hype, so we are where the customer is very concerned that when technology is implemented, it will create real business value. And that's what the customers are concerned about. We work with how we use this internally. We have built our own chat service so that we can use our data without it spreading around in the sky. And then we use our competence work. Outside our customers, there is no doubt that artificial intelligence affects how we work. So for our developers, it is clear that this is a powerful tool. It gives the opportunity to automate some tasks that previously had to be done manually. This allows us to shift our focus and use these forces for more valuable work. We follow, like everyone else, the way the press talks about this. Another reason we bring this up is that we don't see that AI replaces what we do. This gives us tools that allow us to perform our tasks even better, and we can shift our task set to create more real value for our customers. So this is a more value-increasing focus in our work. So that was about the last thing I was going to say about artificial intelligence.

And then you can say a little about our numbers, Stefan. Let's see. Yes, we can start there. Yes, exactly. Now let's take a closer look at the figures for the third quarter. And then we also look at so far this year. Then we start here, you know. So then, in the third quarter, the operating revenues ended at 871 million kroner, and that is a reduction of 0.9 percent from the same period last year. EBIT became 92 million, down 9.4 million, correspondingly 9.3 percent. This gives an EBIT margin of 10.5 against 11.5 in the corresponding period last year. If we look at the bridge analysis on the right, we see a clear picture of what drives the EBIT development. The decline is mainly due to increased personnel costs of 23 million, primarily as a result of normal wage growth. Removal of extra income from wages can have a positive effect of 3.1 million kroner. The factoring rate fell by 2.1 percent points, which corresponds to a reduction of 22 million kroner. And when it comes to the factoring rate, it of course varies between geographies and between subjects. So the decline is therefore not general, but it is individual regions and individual subjects that experience a decline. In some regions, we see an increase in the market, others experience a decrease in competition, and in addition experienced transition periods between projects. Our leaders follow the situation closely, and have good control of lead capacity and necessary measures. The number of employees decreased by 0.8%, which gave a negative effect on 2 million. On the positive side, the hourly rate increased by 2.9 percent, contributing to 23 million kroner. Other costs were reduced by 19 million kroner, mainly due to better social arrangements. In 2024, we had one large joint arrangement for all members of the board, while this year we have chosen several smaller and more reasonable collections. There was no calendar effect, nor an effect from vacation and vacation in the quarter. If we look at the table again, we see that the result of this tax was 70 million kroner, or 68 euro per share. If we look at the figures so far this year, we see that the turnover was 2.9 billion kroner, an increase of 18.5 million, corresponding to 0.6%. The EBIT is at 370 million kroner, approximately at the same level as last year. This gives an EBIT margin of 12.7%, which is marginally lower than last year. Even though the EBITDA is at the same level as last year, there are several larger movements, as you can see in the blue line. The biggest progress comes from an increase in the hourly rate of 3.5%. This contributes to a total of 90 million. We also see that we have a positive effect of 30 million, as a result of lower overall costs. This is mainly due to more reasonable social arrangements and reduced deductions. We also had an increase in the number of employees by 9 people, which had a positive effect on 3 million. The biggest negative effect, at 62 million kroner, was the reduction in the factoring rate by 1.8 percent points. The reason for the decline is the same as described in the previous quarter. In addition, there was an increase in staff costs of 57 million. The increase is mainly due to a wage growth of 4.2% over the last 12 months. Accumulated, there is also no calendar effect. So far this year, the result after tax is 287 million, and it is on the same level as last year. And a result per share of 2.76 kroner, which is also on the same level as last year. If we look at the development over time, both for the top line and the bottom line, it looks like this. If we look at the top line first, I have already mentioned that the third quarter is something weaker than the same period last year, but it is still significantly higher than previous third quarters. The salary income from employees was 793 million in the quarter, at the same level as last year. The decline in turnover is mainly due to sub-consultants, which are down 8.5% to 67 million. The share of sub-consultants now accounts for 7.7% of the quarterly turnover, and this is in line with the strategy of investing in permanent employees. The operating costs are stable despite the general wage growth, which is partly counteracted by cost reductions. For example, lower social costs, defecation, and loss of extra labor. Let's move on to the cash law. The cash flow from sales was 12 million kroner in the quarter, against 136 million kroner in the same period last year. So there is a big variation from 136 to 12, but 12 million is probably a more normal cash flow for the third quarter. And the reason for that is that last year was strongly affected by calendar effects, where the last day in the second quarter, June 30th, was on a Saturday. This resulted in a delay in payments from the second quarter to the third quarter. In the broad analysis, we see the details that explain the development. The quarter started with a bank cut of 383 million. In the quarter, the turnover generated a positive cash flow of 83 million, and we have IFRS 16 effects of 17 million. At the same time, the working capital has been reduced by 88 million. This is due to a large degree of seasonal conditions and calendar effects, as previously explained. IFRS 16 effects on rental obligations negatively affect the cash flow with 21 million kroner. At the beginning of the quarter, the cash flow was 373 million kroner. As you can see, the board has decided on an additional exchange rate of 70 euros per share. The ex-date will be November 13, and the payment will be November 24. To conclude, we will take a short look at the balance sheet. It still shows a solid and robust financial situation. We still have no long-term interest rates, with the exception of liabilities tied to 10 and 4S. The equity ended at 23.4, and the liquidity rate at 1.17, which is something from last quarter. That was the talk, Gunnar. I'll be back to you.

Now I will tell you a little about how we see the future. We see that there is a market that is characterized by high activity in our key sectors. And it is as it is. We have followed this for many years. So if you think about the scope of information, the scope of competition, it is a high activity in the market. Then it should be said, and it says a little further down here, there is strong competition. So it is a tighter market, at least when compared to last year. But as I said, there is high activity, but there is also very strong competition for tasks. We say a strong focus on business value. I visit a lot of customers. I experience a lot of focus around that they are looking for real value. There is a pressure on costs, and there is a pressure that the digitalization solutions that are to be realized, that it should provide real business value. an essential focus around this with all our customers. Then there is what is of preliminary questions and explanations, then it is clear that there is an essential scope of what is minor tasks. But it is also characterized by the fact that our customers ask for the main partner. So they choose one, two or three. That is a draw in the market that we are very happy with, because it plays under the width we have built, and that we can deliver on all our ambitions to our customers. And then, if we do not have enough strength, we take with us cooperation partners on that. But that signifies a clear pattern of acquisition among the large customers. So close relationships to get priority and access to broad competence and capacity. We live in a market that is in rapid development, and it has been known for many years by the IT market. Now with artificial intelligence, among other things, but also rapid development within other parts of what we work with. And then it's about tool use and how we are going to create good applications and so on. It means and puts an essential focus on competence development and build on the competence environments we have, so that we can be excited and ready for how the market develops technologically, and that we can deliver on that and be the leader of that and serve our customers. So that defines a huge agenda for us. Then we have, as I mentioned, yes, there is strong competition. We can look out the window and look around us, and you can see that there are some variable results around. Of course, that also affects us. There is strong competition about the assignments. So it is like that, and it is a joyful development for us, is that it contributes to a better access to good people. That is, that good people move, to a greater extent than we have seen before. So that is positive for businesses like ours, and for BOV. So that is what we had, that is the perspective ahead, what we experience, what we stand in. So if anyone has any questions, we can take them. Yes. I have with me both Steffen here and Lisbeth here, so ... Hi, Håkon Nilsson.

Yes. In Keppler Kjævre. You have lowered your tax rates year over year, and you have had a year with weak development in new employees compared to earlier. I'm just wondering, what is it that has to happen for you to turn that trend, and do you have to raise the tax rate before you start increasing the number of employees again, in the same way that you have done earlier? Or how should we think about this?

Of course, we work with... We have a continuous focus on the rate of return. So the development in the number of employees, I think, is a longer perspective. We have always been in it from a long perspective. So building a solid, robust professional environment is important to us. So... I'm not going to say that one comes before the other, but there are two different perspectives. We must always work with the operating culture among us. We must always work with us. And that's about employee satisfaction and so on. It's about the fact that low turnover is a symptom, a sign that we don't have everyone on duty. That is an essential focus to create so that people are part of the team. And then it's about working more long-term with building strong professional environments. So I don't want to say that one beats the other, but there are two slightly different perspectives, as I see it. So that means that we work with both parts, but they meet in slightly different perspectives, actually. So we are not there, to put it that way, I can answer what it is not. We are not there where we would say that it is completely okay to become smaller, but that we get a very high rate of return. That is not a goal. We are in it for the long run.

And then there is one more dimension. One thing is the time Peggy is talking about, but the other is the size. When we are as many as we are, there are some who recruit every day because they have a masseur, and then there are some who suffer a little more. That is why it is not one size fits all. In such a large organization as ours, it is both. We support those who struggle a little, so we do both at the same time.

Yes, that is a very important point. When you see our numbers, you see the top line. We work with what is below, and there is a very different approach in different fields. Yes. Any more questions? No? Then we thank you for us, and we welcome you back when we will present Q4 in February. Friday the 13th. Friday the 13th, even.