Multiconsult Asa Unsp/Adr

Good morning and welcome to this presentation of the results for Multiconsult Group, third quarter 2025. My name is Grete Bergli, I am the CEO and together with me today I also have our CFO, Ove Hauptberg. Before I look into the details of the figures, just a brief reminder of who Multiconsult is. Multiconsult is a Norwegian consulting and architecture firm. Our primary operations are in Norway, but we also have a presence in Sweden, Denmark, Poland and the UK. Additionally, we are involved with projects across Europe, Africa and Asia. Our business is divided into four segments. Regions Oslo, which is where the headquarters is in Oslo. Regions Norway, which cover all the engineering offices outside of Oslo. The segment architecture, that contains the four architect companies. And international, where you find our engineering subsidiary, ITERIO in Sweden and Multikonsul Polska in Poland. In the market we operate in four business areas and all segments and subsidiaries address market opportunities within these four business areas. In our portfolio we have a 50-50 balance between public and private customers. In recent years, we have delivered profitable growth based on a robust business model with a diverse portfolio and a strong professional environment that can assist our clients with their challenges across business areas and geographies. We are more than 4,000 employees. We execute more than 15,000 projects on an annual basis. for more than 5,000 clients. Let's move on to the figures. In summary, the third quarter is stable performance in a competitive market. Adjusted organic revenue growth year over year is a solid 6.7%. The billing ratio of 70.1% is also a satisfactory level for the third quarter in our business. But the increased competitive landscape means maintaining growth and profitability in line with our ambitions is more challenging. While we have sustained strong performance over an extended period, certain areas of the business are now facing more challenging market conditions and overall hourly rates have not increased sufficiently to match the development in salaries and other costs. The results of this quarter reflects this mixed picture with overall performance somewhat below our targets and expectations so far this year. To address this, we strengthen our ongoing initiatives and are launching additional measures to improve billing ratio and restore momentum. I will go more into detail of this later in the presentation. We maintain a strong order backlog and continue to win assignments that align with our strategy. Comparing the figures for the third quarter with the third quarter 2024, Bear in mind the one-time settlement related to a contractual dispute that lifted the results with 31.1 million last year. Looking at market and sales, we have achieved good sales in the quarter with continuous strong sales in the energy and industry business area, stable sales in building and property, but variations is within normal fluctuations. In the quarter, we strengthened our position within defence with a new frame agreement assigned to Link Architecture and Multikonsult Norway from the Norwegian Defence Agency. And the reduction in order backlog that we have seen for some time has been expected, but is still at a high level and provides a good foundation going forward. The current portfolio of large projects provides for a steady production into the first half of 2027. We are working to secure sales on new large projects, both within defence, infrastructure and hospitals, and carefully consider pricing strategies. There are some very large projects waiting to be decided, but we are experiencing some slowdown in decision-making to invest, and the high production in the new projects is not due until the second half of 2026. This means sales in smaller and medium-sized projects with shorter lead time is required for the time being. Please remember that frame agreement volumes do not get registered in the order backlog until call-offs are made. We are currently in a position where the large frame agreements with the defence agency is at a starting up phase and only small volumes have been included. Now looking at measures to improve profitability and take us back on track. The challenges in the group varies across business areas and geographies. This means the measures to improve margins and maintain efficiency also have to vary. We are facing a more competitive market and recovery in some business areas is not expected in the short term, at the same times as we are experiencing strain on rates. We have identified areas where we need to adapt the organization to the expected market situation. This will require restructuring within some areas. To address cost, we are looking at several initiatives, one of which is to create a more efficient business support organization across the whole group. In the short term, we are also scaling down internal activities. The measures will handle both cost out and operational improvements, and the effects are within multi-consult delivering on target as expressed in the capital market day. It is worth noticing that activity levels remain strong across many areas of the organization with promising prospects ahead. The third quarter is the period when we welcome a number of new graduates and this quarter we have welcomed 69 new graduates, a reduction compared to last year. The turnover remains stable and the growth in employees is related to areas where we see the need for capacity building. We have also made a change to the top management team, strengthening the management of Multiconsult Norway and making a more defined accountability to EVPs to follow up on all segments in the group. And with that, I hand you over to Ove.

Thank you, Greta. Good morning. Then we have a closer look at the numbers for Q3 2025 and also the year to date numbers. And we are starting with Q3. Net operating revenue for the quarter ends at 1,196,000,000, that is an increase of 4.2% from the same quarter last year. The organic revenue growth was 3.8%, and on top of that you need to build M&A activity, that is life tech that came in the second quarter, 0.2%. And the positive calendar effect of 0.2% as well. We had the same number of working days year on year this quarter, but a difference in the value between the working days. And this one-time settlement last year gives a corrected organic revenue growth of 6.7%. The main driver behind this growth are a high number of employees, that is 169, and the 204 full-time equivalent. We see this in the graph underneath as increased capacity. And we also have increased billing rates. A comment on the growth of FTEs that is above the number of fixed employees is caused by the calendar effect of over-operations outside of Norway. This growth is offset by lower billing ratios and we see differences in the billing ratio between the different segments, the different geographies and business areas. We had a very positive effect on the billing ratio in the third quarter last year on higher activity on our larger projects. And in Q3 this year, that is somewhat influenced by that some of these projects have passed their peak performance. And we are waiting the startup of the new frame agreements. And that means that a relative higher proportion of smaller and middle sized projects is in our portfolio. Also, as reported previous quarters, is the normal level of net project write-downs unchanged from last year and below 1% of net operating revenue. But in this quarter, we have a cost effect of 5.1 million due to legal costs and write-downs on the Sultra project. adding to a total of 18.9 million year to date. And these are costs that was spent due to preparations for the court case that started 22nd of September this year, and it still continues. Our counting risk on this project is unchanged at the low level. EBITDA in the third quarter, 62.1 million, a decrease of 39.6% from last year. And the margin is 5.2%, also a reduction from last year, but adjusted margin, 9.6 million below last year, or 1.2% at that point. EBITDA is affected as we had commented on the lower billing ratio but we also have increased employee benefit expenses caused by the growth in number of employees and normal salary adjustments and we have a general cost increase and especially in the IT area. This is also seen in the graph down to the right in the picture. We have also commented in the previous quarters that the discontinuation of this temporary employer's contribution has resulted in reduced costs, 5 million per quarter, compared to the two last years. And Grete, as you mentioned, and we also mentioned last quarter, we are strengthening our initiatives to restore the momentum in the business. Order intake, a positive $1.2 billion and a very strong order backlog. On the report profit, we had to mention that we made a re-evaluation last year on a put option obligation to the rest of the share in our lab, and that had a positive effect on net finance income of $10.6 million. Earnings per share, $1.41 for the quarter. And then we are ready to move on to the year-to-date figures. Organic growth positive by 4.1%, reaching then a net operating revenue of 4,135,000,000. We had M&A activity of 0.9%. The four acquisitions, we had a source site partner, Petty and Rasmussen, and Lifetech. The color and the effect between years is insignificant, and the corrected growth for this one-time settlement on the year-to-day figures is 4.9%. Also, year-to-day figures on the drivers for growth are higher number of employees and FTEs, that is, increased billing rates, and you also see the offset effect on the lower billing ratio. The effects year-to-date is the same as third quarter, and on top of that, we have commented that we had higher-competence death works activities the first half, and also a low activity and few available hours the first days of January. So EBITDA year-to-date, 319.9 million, decrease of 24.8%. The margin, 7.7, decrease of 3.1, and adjusted decrease of 2.4 percentage points. And to sum up then, the EBITDA is impacted by these higher employee benefit expenses, the decreased billing ratio, and also increased operating expenses. So also on this year-to-date figures, we have this effect on the revaluation of this put option on our lab. And the year-to-date figure is 36 million. And that is influence on the finance income and also then on the profit for the period. Okay, then we see the results over time, and bear in mind that the results are influenced by the number of available working days. So starting top left, we see the third quarter results in black, and we see the increase in the net operating income of 4.2%, and also that the positive effect on the rolling 12 months shown in the blue line. Billing ratio to top right is a decrease of 1.1%, but it's a solid level compared to the previous years. We have an increase in permanent fixed employees of 4.3% and all this in combination with the cost change and also the rates gives a margin EBITDA for the period of 5.2 that you see down to the left. Then some comments on the four segments, and all numbers are Q3 compared to Q3 last year. And we start to the left with the region of Oslo. Net operating revenue, a small growth of 0.3%, but corrected for this one-time settlement, the growth is 7.9%. And as we have seen on the total figures, the growth is the same here with improved billing rates, increased capacity in the region of Oslo. It's 61 FTEs or a growth of 5.4. And we also see a lower billing ratio, and we also have approximately half of the SOTRA legal costs in this segment. There's also a technical correction in this segment, that we have moved 15 FTEs from the regional law to non-allocated. Operating expenses increase of 9.2%, a combination of increased employee benefit expenses and increase in other operating expenses, especially on IT costs. EBIT ends at 7.3% compared to a corrected number for last year of 8.4%. Moving one step to the right to region Norway, more or less the same picture as for Oslo. We have a net operating revenue growth 8.5%, also improved rates. We have 70 new FGEs or a 5.5% increase. but also a lower billing ratio in this segment, and the rest of the cost due to this ultra-legal proceedings. Operating expenses increased to 10.9, and the split, the same increase in employee benefit and other costs, especially IT. And EVTA has done a reduction from 8.2% last year to 6.2% this year. Segment architecture. Net operating revenue, 163.4 million. That is an increase of 9.1% from last year. And EBITDA also improved around 2.1 million from last year. The currency effect slightly positive in this segment by 0.9 million on net operating revenue and negative on EBITDA on 0.5 million. Then a short comment per company and starting with Link Norway. Underlying performance is in line with the last year, but following a bit more positive market sentiment after this summer, the market is now flatter for most of the regions and we see delay in project startups. Total number of FTEs also unchanged from last year. Link Sweden. We are still faced with the weaker results this quarter due to changes in the project portfolio in northern Sweden. This is causing reduced billing ratio, but we are able to keep favorable rates in the remaining portfolio and we have very good performance in the very demanding Stockholm market. LinkedIn, Mark, still improvement both in billing ratios, in number of personnel, and also keep cost under control. And our lab, still a very good story, significant improvement in this quarter, increased billing ratios, increased number of FDEs, also very good cost control, and there is no temporary layoffs here either. Arlab is also faced with a more demanding market after some few months with a more positive tailwind and they state that the market is characterized by high competition and focus on rates. So in total in this segment, an increase in number of FDs by 30 and no temporary layoffs. Last segment is international. Net operating revenue increased on 2.2% from last year. The currency effect is positive by 1.7 million on net operating revenue and the coloring effect is negative on 0.9%. EBITDA is 1.7 million, that is 3.1 million below last year, and the margin has been decreased from 5.1 to 1.8%, and the performance level is low both in ETH and WKP compared to last year, and no currency effect on EBITDA. Then our financial position. And we start to the left. We see the positive cash at the beginning of the year of 165 million. And then we have cash flow from operations, 414 million year to date. A negative change in working capital. That is due to high invoicing at the end of Q3. And bear in mind that this is paid back now during October. And we have no increase in bad debt provisions. Cash flow from investment is including the M&A activity on life tech and the negative cash flow on financing is due to the dividend payout in April and the purchase of our own shares to be used over employee program later in November. So in combination with IFRS 16, we have a negative 299 in cash, and this adds to the right on the interest-bearing debt, but we are still below our target of 2. The debt level is 1.77. So the last on cash from me, the free cash flow. This quarter we see in the light blue column that operational cash flow is negative 133. That is mainly due to the negative change in working capital. Then investment of 29 million with exception of M&A activity. That's a total negative effect this quarter of 161. But the free cash flow last 12 months, still positive at 289 million. So with that, Greta, I hand it back to you.

Thank you, Ove. Looking at the market structure, we see that the gross revenue is in line with what we've seen in the market for a while, and continues high activity within energy and industry, and stable in the other three business areas, and the distribution between the business areas is also stable. The strategy ambitions define clearly areas where we seek to assist our clients in the journey to development and improving our environment. The sales this period supports this ambition and as climate related events influence the news and our specialists deliver both solutions and develop methods to meet these challenges. We have a leading position across several domains and in this quarter we have won a number of projects that demonstrate our path to deliver on the strategy. Looking in more details at some good examples, this new factory for Algen Nord is a great example of how the client relations and market position of the recent addition to the group, Petter Jens Rasmussen, now creates opportunities for the whole group. The Frame Agreement for the Norwegian Road Public Administration is a great recognition of our expertise within the area of safeguarding biodiversity and climate. We are selected to develop new methodology for nature capital accounting. and set the national standard to enable us to measure the development on the track to nature neutrality as set out by EU and the United Nations. And we are starting now with accounting methods for road projects. On the international arena, we have had a long history of presence in Africa. And we see a growing pipeline and within renewables in the region. We have been involved under the umbrella of Get Fit since 2013, where the overall objective is to assist African nations in pursuing a climate-resilient, low-carbon development path, resulting in growth, poverty reduction, and climate change mitigation. In the first phase of the Get Fit Mozambique, we worked on... building the institutional capacity and design programs. For the second phase that we have now been allocated, we're looking at how we can realize the market ready projects for the country. We are also very proud to have played a role in making real and ambitious vision from our client on this landmark building construction city in Oslo that brings together the entire construction infrastructure and real estate industry under one roof with around 103,000 square meter and space for 4,500 workers Construction City is one of Norway's most extensive commercial projects and among the most ambitious in terms of collaboration. It holds a BRINOR-excellent certification, an A-rating for energy, and its set is made with future reuse and recycling in mind. We have also increased our engagement in the defence sector during this quarter and we are now a solid supplier in all of Scandinavia within a variety of projects. Then going to the outlook, the overall market remains stable in the sense that there are a number of projects identified in our pipeline. At the same time, there is some increased uncertainty when it comes to the timing of execution of this. Investment decisions remain slow in several areas. Areas where we have a position like defence, energy, industry and infrastructure remain key drivers. Interest rates may boost investment as we are a very price sensitive sector. The building and property market is expected to remain challenging while defence and hospital projects are a positive exception in this business area. The competitive landscape is expected to remain challenging with pressure on margins and price sensitivity across architectural and engineering services. Leaving the quarter, we have a healthy pipeline. We have several framework agreements that will support stability going forward. And before I finish, I will just give some information on the ongoing recruiting of my successor. From the board, they are informing that they are currently working on the recruitment. They have had several candidates that they have considered, but they have not yet concluded the process. The focus remains on finding the right candidate and I have confirmed that I will continue in the role until my successor is appointed. A conclusion is expected in the coming months and will be communicated as soon as the actual circumstances allow it. And with that, we finish the presentation. Here is the financial calendar. And then Uwe will join me on stage and we open up for questions.

Thank you. We start with Martine Kverne. These questions were made during the Norwegian presentation and translated to English. Martine Kverne in Nordea. Could you please provide some more information about the cost cuts you are planning to make and which areas you intend to make more efficient? And how do you view the pricing level in the backlog now, given the cost levels going forward?

I think cut, they said it's okay. Looking at cost cut, we will really take a deep dive into all parts of the organization and there will be a variety of things, but we are looking at how we purchase these days. We will look at some of the IT that if there is a potential there, we will look at our The housing, the offices, spaces that we have. And the second part of the question.

How do you view the pricing level in the backlog?

The pricing level in the backlog is satisfactory. A lot of it has been won on a less competitive market situation than we are experiencing right now.

And the third one was the... Given the cost level going forward, so basically you answered that.

Yeah, but it's also, as we answered in the Norwegian presentation, that adjusting the capacity and bear in mind that we are recruiting 180 people in a normal quarter. So it's only equivalent to some weeks with lower recruitment.

Good. Bengt Jonasen in ABG Sundal Collier. You mentioned, Ove, that the billing ratio has improved towards the end of the quarter. Has that continued so far in the fourth quarter?

Yeah, I think it was a question on the cash that we are able to send out the invoicing and do the invoicing and yes, it's been a positive development and that the bad debt situation is at a lower level than it was at the end of Q3 and bear in mind it's a very, very low level, just a few millions in total in our balance sheet.

Good. Next question was, it is often mentioned that large projects make up a certain share of the production each year. Is it possible to give a rough indication, as a rule of thumb, how much this is?

Yes, I can at least give you the historic figures. We have been up to 30. It will be for us to run at the rate that we want. It should be somewhere between 20 and 30 percent of the revenue.

Last question from Bengt. Regarding the acquisition of Via Nova, you have now carried out the due diligence. Could you say something about how Via Nova looks in 2025 compared to 2024? And can you also comment on the order backlog and the allocation or purchase price to the amortizations?

Yes, so overview is that the value is within the same range as we communicated on LOE before summer and the order backlog is solid and at the same levels as we see in Multiconsult. And we allocate, as we normally do in purchases, most of this value to Goodwill, but some is also on the project portfolio that is depreciated or actually amortized over two to three years.

Thank you. We go to Simon Mortensen in DNB Carnegie. You point out that the result was somewhat below expectations. Could you elaborate on which cost or revenue drivers they were most negatively surprising this quarter?

Yes, we were not surprised by the results of the third quarter because we are experiencing the same tendencies that we've been seeing for a while now, that costs are running faster than income. And that is why we are now going out and expressing an even more... activity to try and stop this. It's important to say we are not in a crisis situation but we've seen a tendency over three quarters that we need to change.

The follow-up question is do you see opportunities for pricing or price adjustments in existing contracts or must this be offset through better mix or utilization?

No, there's definitely an opportunity for rate adjustment. It follows the same rules that we have always had. And we had a somewhat weaker index in the 2024, but we're seeing now that the index has also got a bit larger.

And third question, can you quantify the measures included in the custom billing ratio initiatives you're launching now or the program?

Yeah, well, we are stating that our target is to get back over at the level that we have stated the capital market state at is 10%. And that is within the end of 2026 and that covers the whole business and both on the billing ratios and also cost across both operations and support functions.

Thank you. Fourth question, it's over to your latest acquisition. Via Nova was historically had a Walls Jacobsen as one of the largest clients. Now that they are becoming a part of a competitor, how do you assess the implication of future assignments and the customer base in the Via Nova portfolio? Also, can you elaborate on how you view synergies and margin contributions from Via Nova in 2026?

Yes. The decision to buy Via Nova was based on a pure rationale that they can fill in where we had previously needed to have some consultants. So they fit very well with both the competences that we have and the portfolios that we have. So going forward, this is going to be our strength. When it comes to the agreements that they have with Åse Jakobsen, we are very clear that we stand on the deals that are made. So that any commitments that Via Nova has towards Åse Jakobsen, we will honor that. And in dialogue, we know that it also works the other way, that Nordkonsult and Åse Jakobsen will honor the contracts that we have already agreed on. When it comes to synergies, it is operational synergies, it's how we can take a larger part of the market, how we can enter other segments of the market. But Via Nova as an organisation did not have a large administration, so we are not expected a large sum of synergies in that respect.

Yeah, and the synergies will potentially come on top on what we have calculated as the purchase price. So that will basically potentially give us a better business case.

Thank you. Last question. Can you comment on where price pressure is greatest? Is it in Norway or other markets that you operate? And elaborate on which segments or regions you find most challenging?

Well, what we're finding is that the pressure on margin, high competitiveness is in the whole of the Nordics. And we are based mainly in the Nordics. But in Poland, I would say it's a continuous competitive market. We see that there are still less sensitive areas of less price sensitivity, in particular, maybe at the moment within energy and industry.

Thank you. That sums up all the questions.

Okay. Thank you. Thank you for listening in and have a nice day.

Thank you.