Addnode Group AB (publ)

welcome to the adnode group q4 presentation during the questions and answer session participants are able to ask questions by dialing pound key 5 on their telephone keypad now i will hand the conference over to the ceo johan anderson and cfo christina mcintosh please go ahead

Hello everyone and welcome to this presentation of Adner Group's year-end report for 2024. I'm the CEO of Adner Group, Johan Andersson, and with me today I have our CFO, Christina Elster-McIntosh. We will spend the presentation on Adner Group, our Q4 full year, talk about the specifics about the divisions, our balance sheets, and with our investment case, and then we will open up for a Q&A. And for those of you who are new to AdnoGroup, I would like to remind you that our reporting currency is Swedish crowns. So AdnoGroup, we're all about utilization for a better society. For innovation and continuous development in close collaboration with our customers, we create digital solutions for specific needs. The software and digital solutions that we provide, design buildings, infrastructure and cities, and also the products that we all use every day, like cars and all the way through to life science products that we use. When things have been designed and built, it needs to be maintained with a lifecycle perspective. And the public sector also has a responsibility for rules and regulations. Adno Group, digitalization for a better society. So 2024, it was a transformative year for Adno Group. I'm proud of our employees' efforts over the year, a year in which Admiral Group continued to invest in product development, launched new digital solutions, attracted new customers, and carried out acquisitions, resulting in increased earnings. Over a year ago, we informed about changes to the coming business model for our Autodesk business. During 2024, we have successfully navigated the transition from a reseller to an agent model. It has clarified and demonstrated the value of our proprietary products and services to our customers. Christina will later describe that we actually have delivered what we said a year ago. Yes, net sales will go down, but gross profit, EBITDA and cash will not be affected, resulting in higher margins. 2024 was Adno Group's best financial year ever, and all divisions delivered their best earnings to date. The strong operating result was supported by strong cash flow and return on capital employed. Ten years ago, EBITDA was $768 million, and 2024 we delivered $863 million. We are delivering on our growth strategy, combining organic growth, providing digital solutions for a better society with a value-creating acquisition strategy. So with that, I would like to hand over. Before I do that, let's talk about business conditions this quarter. Our customers' drive to increase their sales and operate more efficiently using digital solutions remains strong. However, the economic and geopolitical situation remains uncertain. The economic situation still has a hampering effect on decision-making processes concerning new and larger system projects. Demand for design and PLM solutions to manufacturing industries were stable in both US and Europe in Q4. However, Germany, which accounted for 10% of the group's net sales in 2024, has been a challenging market and expected to remain a challenging market in 2025. We are seeing indications that the architect markets in both the US and Europe is bottoming out as layoffs among architects have slowed. The demand for case management and geographic information systems from the public sector remains stable. While the number of tenders from the public sector has decreased, our assessment is that we are gaining market shares in terms of the number of tenders won. Annual groups diversified operations with strong positions in segments with structural underlying growth provide a solid foundation for continued sustainable value creation. And with that, I would like to hand over to our CFO, Kristina.

Thank you, Johan. And I would like to start to presenting the Q4 results. But first, I would like to highlight some of the effects that we can see in Q4 on net sales. And as Johan also said, we have informed about 12 months ago that Autodesk has introduced the new transaction model with the transition from a reseller model to an agent model. And we have previously communicated that both net sales and cost of goods sold would decrease, but gross profit and EBITDA as well as cash flow would remain unchanged. And this is what we can see now also happening. And the EBITDA margin as the base is lower would increase. And these effects are now visible both in Q4 and Q for the full year of 2024. During the end of this process with the transition to the new model, we have also reviewed other third-party agreements that we have in the group. Where we have identified that Adnode could be considered as an agent, we have also reclassified NetSales for these agreements in line with an agent model. We have informed in the report that NetSales has been reduced by this reclassification of about 396 millions for the quarter. And that together with a change in the Autodesk new model has a negative impact on growth in net sales. And for your information also, we have included a pro forma table and graphs. We have estimated the previous quarters, how they would have looked like if you use the same principles as we're using in Q4. And this table is included in the presentation material, and we also posted it on our website. And I'm going to go through that in a little bit more in detail later on in the presentation. But looking at the Q4, our reported net sales after the reclassification amounted to almost 1.5 billion SEK compared to 2.1 billion SEK last year. But if we have used the same principles in Q4 this year, like for Autodesk and before reclassification, we have calculated that net sales would have amounted to about 2.3 million SEK instead. And that represents an FX adjusted organic growth of 11% compared to the reported currency adjusted organic growth of minus 30%. Net sales solid both in US and in Europe, with the exception of Germany. And we can see also that the positive earning trends continue in the fourth quarter, and EBITDA increased by 27% to 248 million SEK. And the margin improved to 16.7%. And the substantial improvement in EBITDA was attributable to design division. You can also see that cash flow from operations improved, and now amounted to 275 million SEK compared to 228 million last year. And I will go through in more details in the cash flow later on in the presentation. A good improvement in EPS by 23%, 2.98 SEK per share. And we can also see that we have made acquisitions that we continue to do. And so we did in Q4, where we acquired CTC software from Minnesota in USA. And subsequent to the end of the period, we acquired a Swedish company, Congeria, And Johan will talk more about the newly acquired companies a little bit later. And looking into the full year 2024, net sales reported amounted to 7.8 billion SEK compared to 7.4 billion last year. And that was a growth of 5%. And the currency adjusted growth was minus 5%. And also here we have recalculated if we have used the same principles as in 2023, the net sales would have been 8.8. And that instead would have represented a positive organic growth, FX adjusted, of 9%. Instead of the reported FX adjusted organic growth of minus 5%. In 2024, all three divisions delivered the best annual earnings ever, despite the tougher markets, and EBITDA increased by 35% to 863 million SEK compared to 640 last year. EBITDA margin at 11.1% compared to 8.6 last year. EPS increased to 3.02 SEK per share, and that's a 44% increase from last year. And we have also seen that the board has now proposed a dividend of 1.15 SEK per share, which is an increase of 15% from last year. So all in all, we have organic growth, we have improved efficiency, and we have made add-on acquisitions in the company. We can also see that we have a very strong improvement in cash flow from operations. That is 45% increase to 701 million SEK for the full year. And I have more details later on in the presentation. And then I'm going to hand over to Johan to talk more about the acquisitions that we made.