Multiconsult Asa Unsp/Adr

Good morning and welcome to this presentation of the results for Multiconsult for the second quarter 2025 and the half year 2025. My name is Grete Bergele, I'm the CEO and with me today is also our CFO, Ove Haffberg, who will take part of this presentation. Before I start, just a short reminder of who Multiconsult is. We are a Norwegian consulting and architecture firm with a century of history. With our primary operations in Norway, we also have a presence in Denmark, Sweden, Poland and the UK. And with our projects, we have a footprint in 45 countries spanning from Europe, Africa and Asia. Our business is divided into four segments. Regions Oslo, which is the office and surrounding offices around the capital, Oslo. Regions Norway, which contain the remainder of the offices outside Oslo. Segment Architecture, that contains our four architecture companies. and international that has our Swedish subsidiary ITERIO and Multikonsult Polska. In the market we operate in four business areas, building and properties, mobility and infrastructure, energy and industry and water and environment. in our portfolio it's a roughly 50 50 split between public and private customers and in recent years we have delivered a profitable growth based on a robust business model with a diverse project portfolio and strong professional environment we have more than 3 900 employees in the company Moving over to the summary for the quarter. In comparing Q2 2025 with the second quarter of 2024, it is largely affected by when in the year Easter falls, but the results in the quarter is somewhat weaker than we had wanted. There is a satisfactory growth in revenue and good sales, But the EBITDA margin picture is moderate, and we have some drop in the billing ratio. Although in the second quarter in 2024, it was particularly strong. Over time, we have established effective cost control measures. However, the trend of cost increasing more than the revenue has intensified in this quarter. We continue to conduct measures to mitigate this issue. Looking at market and sales, it's been a good sale in the quarter, with sales well distributed across our various business areas, and we maintain a strong order book. Our strong position in hospitals is confirmed by our involvement in the Telmark Hospital project Additionally, the positive trend in energy and industry is evident by successful assignment of a new hydropower plant and our involvement in carbon capture. We are also pleased to announce that Link has secured the project for a new headquarter for the deep ocean in Haugesund, indicating some progress within the building and property sector. Looking at people and organization, we continue to have a high level of engagement and employment satisfaction. We are 3,971 employees, and we also continue to hand out shares to people who enter the company. And in the quarter, we have issued 3,840 shares. When it comes to the organization, we had the announcement that Kristin Augestad is appointed Managing Director of Multikonsult Norge. Up to now, I've had the role both as CEO and the Managing Director of Norway, and we are now strengthening the leadership of this very important subsidiary. I will maintain in my CEO role until the board has found my successor, as was announced in March. Gunilla Borgen is also appointed managing director in Sweden, ITERIO. She has a long history with the company and is well on her way to take a good position here. We also had the summer program in Multikonsult Norway with 100 students and it's a great opportunity for us to get to know future employees. When it comes to excellence, Multikonsult Norway has again been awarded the preferred employer among technical students. It's an important position to have, making us able to recruit some of the best heads that leave the university. Anders Lise, you probably remember his name from the last quarter. Then we announced that he was nominated for the prize. This time we can tell you that he actually won and he now got the first prize in the EFKO Future Leadership Competition. It's a great honour to the testament to Anders professional excellence and we are honoured to attract individuals who aspire to excel in their profession. When it comes to strategy, we have announced that we are growing our footprint Via Nova is a great addition to our portfolio. We announced that we have issued a letter of intent to buy all the shares in Via Nova. Via Nova is a company renowned for its quality and innovation. This will be our largest acquisition since 2021. The acquisition is expected to be completed during the third quarter. Established in 1998, Vianova has been involved with an entire life cycle of projects and has been one of the pioneers when it comes to using and developing digital tools in engineering. The company has a total of 129 employees with the Sandvika office just outside Oslo being the largest one, housing 78 employees. We have clear goals of what we want to achieve together. We're looking at enhanced expertise, where the combination of the experts from the two companies will build a strong position within road design, water and wastewater, and BIM digital collaboration. There is a good cultural match between the companies, we know each other, we have worked together for a number of years and we share similar values and perspective to the company's contribution to society. Together we will be a very attractive employer and have a good value proposition to our customers. It will also give us access to more growth opportunities. We have various, we have little bit different positions within the markets that we can now share and it gives us a more robust market position. As a part of a multidisciplinary group with four business areas, Via Nova will gain access to growth opportunities. It will also strengthen us together on large projects. There are numerous opportunities within rail renewal and upgrades and via NOVA on board. We can gain access to capacity, broader expertise and the ability to pursue projects independent where we previously partnered up with others. And all these four points together will also then release some collaboration synergies, both when it comes to clients and skill development. And with that, I hand you over to Ove.

Thank you, Greta. And good morning. We will have now a closer look at the numbers for Q2 and then first half of 2025. And we start with Q2 numbers. Net operating revenue for the quarter ends at 1 billion, 415.9 million. That is a decrease of 0.6 percentage point from last year. In this, the organic growth is positive by 4.2%, and we have M&A activity building on top of that. The total of 1.1% is for M&A activities from last year and this year. The calendar effect is negative by 6%, or 85.5 million. And this is the impact of four fewer working days in this quarter compared to the same quarter last year due to Easter, now in Q2 in 2025. The main drivers behind the growth are a higher number of employees, 186 or 231 FTEs. We see these in the graph as increased capacity and we also have increased billing rates that is part of other revenue effects. The positive growth in FTEs above the growth in number of employees is caused by the calendar effect also applied to our operations outside of Norway. The growth is offset by the calendar effect and by lower billing ratio. As Grethe already has commented, the billing ratio was at a historic high level in last year's Q2, and we also continue to see differences in the ratio between our different geographies and business areas. This billing ratio is also somewhat affected by a change in the project portfolio when you have some large projects that are ramping down and we are faced with startup costs in new frame agreements. Also as reported in Q1, the expected normal level of project write-offs is unchanged and below 1% also this year on net operating revenues. This quarter we had cost of a total 4.7 million reported as write-ons on the SOTRA project. This is adding to a total of 13.7 million this year. And these are costs related to the preparations for the core trial plan to start in September this year. And bear in mind that the counting risk on this is changed from last quarter. NQ2 is 67.4 million, that is a decrease from last year, 118.3 million, and the margin for a quarter is 4.8%, also a decrease from 13% last year. The margin underlying adjusted for a current effect is 10.2%. This EBITDA is impacted by the negative calendar effect, also increased benefit expenses caused by the growth in number of employees and also normal salary adjustments, and also on other operating expenses, primarily due to higher IT costs. And this graph you also see done right in this picture. As also commented in Q1, the discontinuation of the temporary employer's contribution resulted in reduced costs to the level of 5 million this quarter compared to the same quarters the two last years. On the cost side, we are somewhat affected by the new frame agreements that requires new investments in offices and also mainly security rooms and also some expertise. Also the role of our new group strategy and increased focus on growth has necessitated some increased costs and to compensate for this and to ensure that we have a cost structure that is adapted to the development in rates and billing ratios, We are now reinforcing the focus we have always had on costs and this will require different measures in different parts of the organization as it's not a one-size-fits-all approach. Also, as Grete commented, good sales order intake is about 1.5 billion NOX and a solid order backlog of about 4.5 billion. The reported profit 40.3 is affected on comparison by income on net finance last year. That was on a revaluation of a put option obligation on the acquisition of ALAB and the effect was 25.4 million. So this adds up then to earnings per share of 1.45 for Q2. I guess then you are waiting for first half and here it is. So we have net operating revenues for this first half of close to 3 billion NOx, 2 million 939 million. That is an increase of 5.3% from last year. Organic growth also here 4.2% and the M&A activity is 1.2. Calendar effect, same number of calendar days, so the effect is only 0.1 due to the different values on the different days. And the main drivers also first half, half number of employees has increased. and also increased rates. And we see also for this first a lower billing ratio. We explained Q2 on the previous page. And the first half ratio is also affected by a higher focus on competence network activities the first month of the year and also the low activity and few available hours the two first days of January. So I ended up with an EBITDA of 257.8 million and the margin is 8.8%. We have a solid order in the first half, 3.2 billion NOX. So then a highlight on development over time and starting at top left, we see that the growth in net operating revenue is slightly negative 0.6 and the rolling 12 is also negative by 0.2 that is in the blue line. Billing ratio 72.2%, decrease of 0.9. But bearing in mind, we are still at a historic high level also when you compare to the previous quarters on this graph. Growth in number at least 4.9%. And in combination then with the change in other revenue effects and the employee benefits and other costs, we end up as you see down left, EBITDA margin of 4.8 for this quarter. Then we take a closer look at our four segments and all numbers are compared Q2 this year with Q2 last year. And to the left regions also net operating revenue 528.8 and that is a decrease from last year of 1.8 percent. On that, we have a positive drive on improved billing rates and improved capacity, that is 45 full-time equivalents. This is offset by the negative calendar effect, that is 36 million, and a lower billing ratio by 1.5%. And we explain the differences on the first page. And we also share the Sotra cost, 50% of this segment and segments region Nordkapp. Compared to previous year, there is also a small negative effect due to a change in this segment, where 15 full-time equivalents is moved to non-allocated, that is business support. Operating expenses, 476.3%, increase of 7.1%, a normal increase on employee benefits, and also on operating expenses, 8.4%. So we end then on EBITDA on 38.3 in this segment. Moving one step to the right, regions Norway. Net operating revenue, 583.4, an increase of 8 million from last year. Also here we see improved rates and increased capacity. It's 75 FTEs in this segment. But also offset effects on negative calendar effect, that is 40 million, and lower billing ratio that is reduced by 1% at this point. Operating expenses has increased by 13.8% and that is also including the acquisition of this company Petteri Rasmussen. Employee benefit has increased due to ordinary salary adjustment and change in staffing level but also recruitment of more senior personnel due to the growth and to have increased capacity. Other operating expenses also increased and that is a number of one-time costs here due to preparing for the new frame agreements, increased capacity and also new ways of working. EBITDA in these segments and then at 29.9 million for this quarter. Two to go, going to architecture. Net operating revenue, 206.4 million, that is a decrease from last year. Also on EBITDA, we see a decrease from last year, but the underlying performance has really increased here due to a negative current effect of 9.4, and that last year had one-time effects on sale of our royalty rights in Denmark, and also one-time write-ups. Currency is positive in this segment by 3 million NOX on net operating revenue and positive on EBITDA on 1.2. Some small comments per company, starting with Link Norway. Underranked performance in line with the same quarter previous year. and the market conditions still differ in in this company due to geography and business areas and is challenging part of the country especially in the also market and like we saw last quarters we characterized also market by delayed project startups but bear in mind the sentiment is now slightly more positive than we saw previous quarters Total capacity has also increased from last year and there were no temporary layoffs at the end of Q2. Going to Link Sweden, we are still faced with weaker results this quarter due to changes in the project portfolio in Northern Sweden and this is causing reduced operating revenues and also billing ratios. But the ability to keep more favorable rates in the remaining portfolio, also good performance in the Stockholm and Gothenburg market that is very demanding at the moment for our competitors. In LinkedIn market, the improvement in performance continues. We have improved rates and ratios and also solid cost control and we have the ability to attract new customers due to our attractive competence in this company and we as already commented had a one-time effect last year on the sale of this royalty rights. ALAB has a significant improvement from last year. Improved rates, improved ratios, and also reduced costs. And here, no temporary layoffs this quarter. And we see clear signs of improvements in the market, but it's a still demanding situation. High competition and focus on rates. So in total, an increase of 14 FTEs, and we are happy to inform there is no temporary layoffs in this segment. International, the last segment, net operating revenue has increased from last year by 7.6%, and a positive currency effect of 4.3, no calendar effect, and also an increase in EBITDA, and the increased performance is both from Ethereum and Polska. Last year, we had a negative effect on a bad debt provision that was reversed in Q4 last year. So that is a part of the growth in this segment. So then the financial position, you see on the left the change in cash, starting with a positive 165 at the beginning of January. We are creating a positive cash from overpropriation, 297 million. Then we have a normal change in the working capital, but no increased risk there. We invested $48 million in combination with M&A and normal investment in the operation. And then we have paid dividend to you as a shareholder that is creating $270 million of this negative cash from financing. But we end up then with a negative cash situation, 197 million. But that is included in the graph to the right, where interest-bearing debt still is at a very low level, 467 million. And that means that the gearing ratio is just above 1 and well in line with our statistics. And we also have refinanced the company this quarter with Nordea and we have increased our capacity from 1.1 billion to 2.5 billion and that creates a solid fundament for further growth in the company. and then the last on cash and this quarter from the operation positive cash on 116 that you can see in the blue diagram to to the right and negative and sorry net investment effect is 16 so total cash created 100 million and rolling 12 is 455 that you can see on top in the black and then greta i hand it back to you thank you

looking at the gross revenue it's that sorry i have to get my notes gross revenue it stays at the same level for the second quarter 25 as it did for 2024. the trend where energy and and the industry and water and the environment are increasing is also confirmed in this quarter. And I'd just like to inform you that revenue on our frame agreements with the defence authorities is largely entered into the building and property. We are working systematically on realizing our strategy. Just a short reminder to you all of the five ambitions that we have. I'm not going to go through them with them, but I just want to inform that we are seeing that the contracts that we are currently winning are well aligned with the ambitions that we have set out in our strategy. Also in Norway there was a big report called the State of the Nation. It is an important one and it's receiving a lot of attention because critical infrastructure is an important part of civil society's preparedness and Multikonsult have a lot of expertise to close the gaps that has been identified in this report. Also, the frame agreements that we have within defence are strategically important to us. They represent a large future investment, it represents stability in our project portfolio, and it is an opportunity to maintain a very strong market position. Then, finishing off with outlook. The outlook remains stable. There is continued investments in key public sectors like defence and infrastructure. The building and property market continues to face low investment levels but we are seeing some improvements. There are projects now going from planning to actually realization and in particular within hospitals we see that there are several hospitals now being planned. The infrastructure market is solid. The competitive landscape continues to evolve with pressure on margin and pricing sensitivity. On the other hand, geopolitical uncertainty and US tariff schemes are expected to have minimal impact on the short term for our business. And a healthy pipeline and several frame agreements support stability for Multiconsult going forward. Then just finishing off, reminding you on some of the dates going forward, and the next presentation from us will be in November. And with that, we open up for questions.

um yes thank you um we had some questions on the norwegian presentation this morning so i translated them over for you and some of these have you already mentioned in the presentations of you and there's quite a lot of them so maybe you should be quite short on this magnus rasmussen in sab the billing ratio is slightly down compared to the comparable quarter when will you be back on the same level as the compare comparison quarters

Well, we have seen that over time we have lifted the level of our building ratio and the level that we saw in the first quarter in 2024 is record high. We expect to stay at least on the level that we see at the moment, but it depends quite a lot on the portfolio that we have with large projects. billing ratio goes up. A number of smaller projects, the billing ratio will have some downturn, but normally the rates are then higher. So the effect on the business is the same level.

Thank you. Costs are increasing especially in region Norway. Is this a one-time cost just for second quarter or is this something we can expect going forward? That's a combination of that since we have

recruited more senior personnel and is allocated IT cost as well. But we have some one time effect due to preparation for the frame agreement. So this is a combination, but we have as reported no focus on cost and we take action then that is actually specific for our different part of the organization.

Thank you. And then his last question is regarding the outlook. And you are making a small change to the outlook by including that there is a greater margin pressure. What is the reason for including this?

Well, that's what we experience in the market. And as I've explained previously, the solid backlog that we have has meant that we could be more selective in the market for the projects that we go for. But we do see when we enter locally in some places, it is very, very competitive on pricing.

Thank you. Can you comment on the order backlog and its development?

Yes. We have had, over a number of years now, an unusually high order backlog. And it relates back to the sales that we made on the hospital in Oslo, where we got one billion in. And we have prepared the market for the expected downturn to somewhat more normal levels. We still have a record high order backlog, a very healthy backlog.

Last question from Ben. Can you say what the revenue recognition of one-time income in our architecture last year was in this quarter?

We haven't been specific on that. I was also commented on the Norwegian road cost.

Martin Kvarne, Nordea. Can you say something about the expected level of other operational costs going forward also with regards to the integration of Via Nova?

Yes, the integration we know we need to plan for and logically there will be some synergies there as well on the cost side but that is not dealt with yet or agreed upon and that is a combination of that but others who are working specifically with like IT costs and other costs and that refers back to the last answer I gave also.

Second question from Martina. Can you say something about the result in Via Nova for 2024 and if there are any extraordinary items here?

Not that we are a VRO and we have a due diligence going on right now and we will have a further communication on that when we hopefully then sign a sales purchase agreement by end of this quarter.

OK, thank you. She also had a question about increased competition. Can you say something about in which area this specifically applies to?

Well, what we're seeing is primarily it's in building and building and property. But traditionally, then when you get one area with high competition, they try to move into other business areas. And that's what we're seeing now. We're meeting higher competition also in some of the other business areas.

Good. You commented on new projects from the framework agreements. How will the new projects compensation affect the billing ratio when we're looking at the development over the last or next 12 months?

That's what we expect because we are just at the beginning of a number of frame agreements and we have a client who needs to organize itself to get the call off to get the projects going and it's quite normal that there is a bit of a delay on getting production high but we expect within the next six months we will start to see the effect of higher billing ratios here.

Good. And then the question from Simon Mortensen, who we did not be able to take in the first session this morning. Can you comment on the pricing and margin profile in the order backlog? Are these projects profitable enough to support the earnings improvement, or should investors expect continued pressure despite solid volumes?

It's a mixed picture. And I think that's where you find that our business model, the strength in it is that we can move to more profitable markets. And we are very careful when we do our bidding to make sure that we have a good mix of the margins that we can expect in the various projects.

Yeah and also that we commented in this presentation that we all the time have a focus on costs and also other effects to compensate if there are changes. So we still are committed to deliver 10% on every day as communicated as part of our strategy.

Okay, then last question from Seaman. Employee costs per head increased further in the second quarter, while billable rates lagged. What specific measures, pricing, project mix, or productivity are you implementing to ensure that wage inflation does not continue to exceed seed revenue per FTE in the second half of the year?

yeah that is a mixed picture on that and also goes back that we are specific on that but going forward we need to be very precise on this and to bear in mind this but as Grete already commented on that we have a mix in the portfolio and need to bear this in mind also planning for the right staffing level yeah that concludes all the questions okay then we say thank you from Oslo and have a nice day Thank you.