Bravida Holding AB (publ)

Hi, everyone, and welcome to the presentation of the Q2 report of Bravida.

You are now in the main conference.

Thank you so much for that. Welcome again to the Q2 interim report for Bravida. And as always, it's myself, Mattias, CEO, who will present this together with Petra Vranjes, the CFO.

We will do our best to make sure that you understand.

This quarter in detail. So with that, we start with presenting a very strong quarter. Net sales, 7.6 billion approximately. Organic growth, high 9%. We were a bit positive surprise when we had 1% organic growth in Q1. And we are following up that with 9% organic growth in this quarter, which is impressive, I would say. EBITDA margin up to 7.5% compared to 5.4%. And the order intake up 44%. And even if we have some strong sales numbers from last year as well. And then it's also adjusted. The order backlog is adjusted for the sales of ABECA as well. And the order backlog is up 21%. And net debt still on very good low levels at 1.3%. The organic growth, I think it's important to say and also happy to say that we have organic growth in all countries. So the 9% is coming from organic growth in Denmark, Sweden, Finland and Norway. And especially a bit surprised about Norwegian business that are struggling and so far they haven't produced anything on the big data center that we won a couple of weeks ago. We have 0% in contribution from acquisitions. We have some positives, but that is actually taken out of the sales of ABECA. So all in all, it's zero organic growth and the currency is zero as well. We see a very good balance between small-sized, average-sized contracts. Again, the big data center wins hasn't impacted the quarter lot. We see a good demand from defense industry, normal industry, as well as what we call core business. So really strong numbers all over the line. EBITDA is growing 51% to 570 million Swedish kronor and the margin 7.5 as I said. The EBITDA was impacted by non-recurring items of net 118 million SEK and that is because of the sale of ABECA but also that we have some restructuring costs taken in the quarter in Sweden. If we look at the last 12 months, we have a margin of 6.5%. And except for the organic growth in all countries, we also see an underlying improved margin in all countries as well. So really, really nice to see. Society's transformation benefit Bravida's business. Absolutely. Let's see what happens with energy savings. It's getting more and more interesting. I think because of what's happening in between Iran and US. I don't think anyone to be dependent on any oil today. So working with different kinds of other energy sources is good, which we in Bravida are doing. We see continued growth in hospitals and maintaining those buildings. Reliable security system is getting more and more interesting as well. Industrial projects, defense industry, as I said, and maybe the ice on the cake is for now data center. And we have a really long history of doing that. So that is, we are in a good position for now. If we look at the order intake and order backlog, you should see these numbers as first the order backlog in Sweden is lower because of or is impacted for the sale of ABECA 500 million plus. And then last year in Q2 in Denmark we had a big order into the books as well where we announced an 800 million Danish kronor contract with NOVA Nordisk approximately 1.2 billion Swedish. So the ABECA impact in combination with the one big order last year in Denmark is in total 1.7 billion approximately. So with that in hand side, the order intake increase of 44% is even more impressive and the order backlog increased with 21% is also something that will help us to continue to grow the coming quarters. You see at the bars that the order intake at 11 close to 12 billion in the quarter as well as the order backlog above 20 billion in the quarter for now is the highest ever. I previously have said that I've been very relaxed with an order backlog around 16 billion and I have been so. Now I would say I'm really excited about the new orders that are coming and that will of course support the growth going forward. Good orders with balanced risks and as always when we're discussing large projects in Bravida we are pricing risk. We also think that should benefit to a higher margin than the normal or the core business is actually contributing with. We are not only selling to data center customers. This is a selection of new customer assignments during the quarter. First, to the left, we have been a partnership with Hitachi in Ludvika in Sweden. an industry building where we're helping them with electrics, HVAC and sprinkler system and also making sure that they are meeting the requirements for LEED rating. In Denmark we have one new office building to Novo Nordisk Foundation all different disciplines and in Finland we have been helping Fazer with their new production facility in Lahti in Finland. All three contracts are evidence that we are seen as a very strong supplier and reliant supplier to customers who is market leader in their different segments. With that said, we have done data centers. We will continue to build data centers. Since 2009, we have been part of building data centers on approximately 200 megawatts. If we look back in the mirror, the data centers have been a bit smaller than they are today, but still we have the knowledge, we have the experience, we know what to do. So this is four new data centers that we have won in the past month. First, the biggest one in Norway to Green Mountain, an order at 4.3 billion SEK. It's planned to be executed in end of Q3, beginning of Q4 of the summer, and it will be finalized somewhere end 28 or beginning of 29. Then, last quarter as well, down to the left, where we can't disclose the size of the contract, but we continue to work together with the XDX Markets in Kajani in Finland. And that is pretty similar to the case up to the right, where we have been building to Ekodata Center in Borlänge, Sweden. for many, many years. That is a trend as well where we are looking for partners in our customers, but also the customers, they are looking for partners to secure their competence, resources to build what should give them some more earnings going forward as well. And then recently another data center at North in Finland in Kovala 2.2 billion SEK it was addressed as 200 million euro in contract value also an exciting contract that will be helping our Finnish business going forward with growth as well as margin expansion. But again, we are doing more than data centers. This is a slide showing data centers or other advanced technology projects. We are building to Lantmännen in Sweden. We are working with Hospital in Denmark, Hitachi Energy Park in Finland. We are doing maintenance and service at Great Belt and Öresund Links. And we are doing a converter that is called Viking Link in Denmark. And then we are working with airports. Then to the left you see a group of data centers which is a bit smaller. We are not only working with a big hyperscale data center. We are also doing what should or might be considered as small data centers. But still important and important customers for us in Bravida. Acquisitions still a bit slow and a bit tricky to find different ways to actually get the signature on the contract. We still think that the targets we're looking at is not good enough and the one we really want to buy is a bit hesitating because they have been handling the downturn in the market in a really really good way so they want to wait until their earnings have picked up again. but the activity is high and it's always on our agenda and I hope and I think that there will be some more activities in the fall after the summer but still a bit too calm I would say but we know we have the balance sheet we are willing to do acquisitions we think it's a good idea to do it And meanwhile, we don't find enough of acquisitions. We are continuing to focus on other restructuring measures within Bravida, but also use some of the money, for example, to buy back program. And I guess when I hand over to Petra now, she will say something about that later.

Yes. Thank you, Mattias. And great insights in some of the businesses that you share. So now we will go into the countries and the segments as usual, and I will start with Sweden. So Sweden's net sales landed on 3.6 billion, which is, as Mattias was mentioning, all the segments are up and Sweden is up 7% year over year compared to the 3.4 billion last year. In Sweden, the organic growth is 8%, and this is because we are adjusting for acquisitions and divestments in the same bucket. So in this case, we have a divestment with ABECA. We also have an acquisition which is still reporting in Sweden, that's Kontob. For the last quarter this time, they are reporting in acquisitions as well. But all in all, acquisitions is down 1%, bringing the overall organic growth to 8%. Looking at the markets and the business, we have solid demand in the northern part of Sweden, and the southern part of Sweden is picking up on the demand side as well. So slowly, gradually starting to pick up there. installation and service ratio is 53% to installation, 47% to service in this quarter. And with these numbers, we are landing on an EBITA margin of 5.7% in the quarter. When we compare that to last year's 6.1%, we should remember that there is a restructuring charge going in, which is 40 million in this quarter, and we have guided on 70 to 90 million in restructuring. We have now, during the first half year, reported 60 million and are expected to report another on the lower end of the 70 to 90 million into Q3. On the EBITDA margin, when we adjust for the one-time effects, Sweden is reporting 6.8% in the isolated quarter. Looking at the order intake, as you can see, we have taken in orders for 3.6 billion, close to, and that brings us to a total backlog of 7.7 billion. In the backlog we have the ABECA divestment so that is reduced in the backlog with 560 million approximately in the quarter and in the backlog so you will see that for the year as well and I think Mattias also mentioned that. So that's Sweden. If you look at what we have done then with the divestment of ABECA, so you get the full picture of the transaction. The full transaction went through on April 1st, and it has generated 158 million of capital gain for the company. That capital gain is reported in the income statement as other income, and it's also reported on the group segment. So it's not reported in segment Sweden, but in group segment. Net cash flow proceeds that are impacting the second quarter are 208 million. They are reported as within the investment activities. So they are not affecting the operational cash flow nor the cash conversion rates. And then the order backlog that I was just talking about, the 560 million, which we have reduced, they are impacting the segment Sweden since ABECA was selling in segment Sweden. So that's reduced in that segment. And why we are selling ABECA? Well, we have already gone through this. It is not one of our core business. It is also not part of our strategy plan. So it's not the perfect fit. ABECA revenues was reported with 470 million approximately on a yearly basis and 36 million in margin and we will adjust that within the acquisitions and divestments for the coming quarters as we do with acquisitions as well. So going to Denmark. For this quarter, Denmark has reported a net sales of 1.9 billion, and that is up 10%. And Denmark is now showing a growth of 11% organically, since they have an impact on currency with negative 1%. With this, Denmark is having a double-digit growth for the first half year, 2026. The split 55-45% on installation and services, generating then an EBITDA margin of 5.1%. Denmark is executing on the transformation and recovery plan, and they are doing it according to plan. Margins are landing as we were expecting, and this is done by selective projects and work on the cost side. In Denmark, we have a decreasing order intake, so we have negative 33% landing on 1.9 billion for the isolated quarter. Last year's second quarter, we had a large industrial order, and Mattias mentioned that, also to which customers. That's approximately 1.2 billion that came in last year, and that will skew the numbers a little bit on the year-to-year comparison. But if you see that Denmark is still having an order backlog of 4.6 billion, which is a stable and good order backlog. And looking at Norway, where we have the reported net sales on 1.5 billion compared to 1.3 same quarter last year. And Norway is up 11% with an organic growth of 5%. We are also having a positive impact on the currency exchange rate and a small impact on the Norwegian acquisition, which we will be reporting until Q4 this year. splits on the business, 40%, 60% on installation and Service, and that brings us to a margin of 6.1%. And as you can see, Norway has improved the margin with 30 basis points, sorry, 20 basis points over the year. Also on the first half year, you can see the improvement in the margin. And we're expecting Norway to continue improving somewhat with the higher sales. In Norway, we have reported the Green Mountain contracts of 4.3, a bit over 4.3 billion in order intake this quarter. So with that, we are landing on 5.8 billion in order intake and a 6.6 billion And as Mattias was mentioning, this order is expected to execute on from end of this year and throughout 27, 28 and a bit into 29. Finland, 650 million in revenue up from 552 brings Finland up 18% and it is also 18% in organic growth since the currency impact and acquisitions are approximately the same but in the different directions. In Finland we're reporting an acquisition which will be continuing to report until end of this year also into Q4. Finland is also on double-digit growth on the first half year this year. In Finland, we are seeing a gradually improved market as an underlying market. The data center market, I'm sure you have all noticed, is very good and improving, but there's also an improving underlying market. And we have a 70-30 split on the installation and services. With the increase in net sales and with focus on cost, Finland is now improving the EBITDA margin and is landing on 3.2%, which is a good improvement from the 2.7% where Finland has been reporting last year. On the order intake, we are seeing a flat order intake in the isolated quarter. However, the backlog has increased with the most recent orders taken that we have reported in Q1 and before. And the latest news on the Finnish data center is not included in this report because that was after Q2 closing. Okay. Okay. If we then go to the financial positions, we are having a cash conversion of 77% compared to the 80% last year. And with that, you can see that we are also reporting a 1.3 times net debt to EBITDA ratio in our loans and papers we do have approximately 5.3 billion of potential loans that we can take but they are utilized to 2.5 billion with the leasing 1.5 billion as as mentioned and 1.3 in the net sales to EBITDA ratio if we exclude the leasing we are on 0.9 net debt to EBITDA ratio We also have a cash position which we are talking about a lot. So that is our disputes and outstanding outstanding payments receivables. And with that, we have a ruling in the Norwegian dispute with the Savanger University Hospital. The ruling came in in June of this year, and it was to the large extent into Bravida's favor. And the ruling is obliging SUS to pay 320 million SEK. Swedish crowns for installation work and 145 million in interest and legal costs. The ruling can though be appealed until beginning of September 26. And finally, Mattias mentioned a little bit about the share buyback program. And as you have seen, we have had the share buyback program running in Q2, where we have concluded the program was running until July 9th, and we have repurchased 863,100 shares. to the average price of 115.85 Swedish crowns and the total amount amounted to 100 million as we stated in the beginning that we would utilize for buying back shares. The board has also decided today to carry out an additional buyback program during the third quarter of the year and we are going in with 100 million for that buyback program which will be conducted from August 13th and concluded before the Q3 report is released. So that's with the buyback. And if you look at the sustainability reporting, we have the LTIFR on 5.3 compared to 5.2 in the last year's second quarter. We have a target of 5.5 and we are working proactively to decrease The rate proportion of vehicles electrical vehicles is 50% compared to 40% a year ago and the target there is 57% until the year 2029. So we are well in the reach. Change in CO2 emissions scope 1, 36% also improving quite nicely to the 22 last year and the target there is 42% reduction until 2029. And the change in tons is of course following the earlier target, so 35% there. And with that, I invite you back in.

Thank you, Petra. We have improvement in close to all KPIs. That's good. Just a reminder, strong second quarter in general, overall, I would say. 9% organic growth is not too bad.

Not too bad.

7.5% margin.

It's also decent, huh?

Yeah. And EPS, 2.10 kroner. I think that is up 60%, which is good as well. Cash conversion, we know it's a bit weak for the moment, but we also know that the reason why we are not worried. We know that that will be improving the coming years. We are not worried.

We know it will be improving, yes.

Yeah, and then we have a very strong balance sheet, 1.3 times the net debt. And then the LTIFR, a bit higher, but we are on quite good levels now. We're not happy or satisfied with that, but it is getting more and more tricky to improve that number. But we do our best. solid and exciting platform for long-term value creation is the headline on this slide and I agree to that strong organic growth improved margin and we have a significant increase in order intake and order backlog that will help us continue to develop Bravida going forward. We see that we are very attractive from both of the customers and partners as well as existing and future employees which is good. We are now entering into new mode for many quarters, a couple of years now we have actually taken out resources. My ambition and the whole management group's ambition has always been to create a stronger company in this downturn so we can leave the downturn as a better company than we were when we entered it and I think we are on our way to doing that. We have a transformation in the society that gives us some tailwind. High customer trust as I said and attractiveness both to new as well as existing employers, employees. We are seeing an attractive employer and that is good. Financial position as Petra just told you about is good, close to fantastic. And we are ready to invest that in future growth. And our market position gives us the opportunity to have a balanced portfolio of large, small, medium-sized contracts as well as a very high service revenue. So this is a really solid and exciting platform for long-term value creation as we say on this slide. So, with that, before we open up for questions, next report is coming out the 23rd of October. Are we looking forward to that already? We have a lot of things that we should do before that. We are looking forward. And then you have the year-end report in February. But I think we open up for questions. The rest of the date you can find on our website. So, some questions, I guess.

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The next question comes from Oscar Ronquist from SEB. Please go ahead.

Thank you and good afternoon. So I want to start off with the data center orders, which you seemingly have quite a good momentum on. Could you share any thoughts on the margin here? I know you talk about more complex projects being a little bit higher in margin in general. Can you steer us in any direction here or comment anything of the magnitude when you have this large backlog, how that will affect the margin on a product level? Thank you.

First of all, I think this is, as you say, an exciting market, an opportunity for us. And that's also why we are a bit cautious about what we should or will want to disclose or not, because there is some competition in the market. We think we are ahead of the rest of the competition. We are, for competitive reason, a bit more cautious in what we are telling the market in this segment. But as always, when Bravida is doing and looking at large projects with slightly different types of risk, it's not always the risk is higher. The size as such gives another perspective on the risk, but we are always pricing the risk and it's not only what we're doing it's also the contracts we are signing and I think many that's the reason why we're not letting our branches work with this because there are complex contracts taking our own lawyers many weeks to actually agree upon what should be said in the contract so But in general terms, you can expect a higher margin in those contracts that we have in the rest of the business. And I think that is what we will say. And yeah, I think I'll stop there. Balance contracts are the risk and reward, I would say. The contracts, we are very – it's a couple of things. It's the pricing and the margin, as you asked about, but it's also the terms in the contracts we are agreeing upon. That is important as well. Got it.

Thank you. And then just want to hear about any sort of cannibalization potential from this. I mean, I assume that there could be some bottlenecks and you may be filling up the capacity that you have with these very large orders. Can you expand anything on how the underlying business is developing during a contract as such? Do you see significant cannibalization? You have obviously talked about using subcontractors, etc. Any quantification would be helpful.

Yeah, but I think it's a good question. There is a risk of cannibalization as you say, but our main focus is to do this as well, not instead of. And then if we take the Stavanger area where we are working to Green Mountain Our local resources, they are supposed to continue to service the existing customers that they have had for the last 25-30 years. So we are not leaving the old partners, the loyal partners to us. We will continue to do that. Then on the other hand, of course, a lot of people in Bravida, they want to be part of this project. So it's a fantastic opportunity. opportunities for us to foster new talents, give talents throughout the whole group, give them the opportunity to travel to Finland, Norway, whatever, to learn how to run large contract projects. So we will give them that opportunity, of course. But the main part of resources in the Stavanger area, as well as in the Finnish area where we are going to build to at North, they are supposed to continue to work with existing customers. And then we will use some to the data centers, and then we solve the rest with new hire or subcontractors.

Perfect, thanks. I just have one more question regarding Sweden. Looking at, you know, you have taken some structuring costs Just wondered about the underlying run rate here. So if we adjust for the restructuring costs and look at the margin, is there more to do, you think, in terms of the underlying margin development on the cost side of things? Or should we see that the underlying margin now reflects the run rate that you're supposed to have, excluding any sort of project ramp-ups in data centers that could expand the margin, et cetera?

No, it's a good question. And we are doing the transformation in Sweden. And as I said, we are going to finalize that exact transformation here now in Q3. Is there anything else we can do or more? Well, there's always things we can do. And I think there's always things we are doing. So we are focused on securing that we're delivering in the best ways that we have the best setups and that we have as little, for instance, administrative burden as possible on top of that we're doing an efficient setup and know how to deliver. We're not really looking at any new transformative piece, but as an everyday business and all the time on execution, we're absolutely looking at and Sweden is looking at the organization there. ASKING QUESTIONS ASKING QUESTIONS ASKING QUESTIONS But not everything will impact the margins when we do more efficiencies because we also do investments in new contracts, new sales opportunities. So I think you should think that the underlying margin in Sweden is probably where it should be when you take away the restructuring cost at this moment. Then, of course, everything depends on what type of contracts we bring in and how the business looks like, the underlying business. So it can fluctuate a little bit up and down, but I think you should view it as where it should really be approximately.

100%. Understood.

Thank you very much.

The next question comes from Simon Johnson from ABG Sundal Collier. Please go ahead.

Hello and good afternoon, Mattias and Petra. Thanks for taking my questions and also congratulations on the strong numbers here. First off, I want to, or I wonder if you can expand a bit on the strength in Sweden, especially, you know, the acceleration compared to the recent quarters, both in terms of the stronger sales growth and also the surprising, a bit surprising strength in the margin here adjusted for the one-off. if you can sort of say if there were any specific one-offs here in this quarter or where the underlying drivers came from. I think you wrote about Northern Sweden being a big driver here, but if you can expand a bit more on that would be great.

Yeah but I think sometimes we try to simplify the world too much maybe but we have been working I'm very proud of all the different countries actually we have been working for a couple of years now of taking out cost adjusting the sizes of branches where the demand is a bit lower so the management Yeah, the things they have done locally has been fantastic and and when the market comes back a bit then you have some support from the growth you get the plus plus plus and then the margin goes up. So I think this is not just luck and created by better markets also a lot of management people in Bravida who's been struggling and done a lot of good things for a couple of years and now it's paying off so I'm so happy for them and it's of course good for us to see that it's working so a combination of hard work smart things that they have been doing and then you have some tailwind from the growth in the market as well and then the margin comes up Do you want to add something, Peter?

I fully agree, yeah. No one-offs. Yeah, exactly. Except the one that we are lifting, the restructuring, but no other one-offs.

Great. That makes a lot of sense. And that also takes us to my next question here. I think it was impressive that you delivered this growth, this sales growth, with you know, continuing to reduce the headcount on a sequential basis. I know you have said that you have kept some slack in the system here through the downturn to be able to, you know, deliver here once growth in the market comes back. And it looks like this is what we see right now. And I wonder if you have sort of closed that slack now, you think? Are you more on full capacity and need to sort of recruit more now to...

I think we still have slack in the system because we still don't see a very good market in the south part of Sweden. Sweden in total is good, but we still see some differences. So there is still some slack, absolutely. What was the other part of the question?

Do we need to hire? Yes, exactly.

Yeah, and I'm really, really happy to say that we want to hire new people in some areas, of course. And yeah, you said something about the growth as well, Simon, that, yeah, you can say, if I should give you something, we have the strong growth in the quarter, but it was actually even better in the end of the quarter than it was in the beginning of the quarter.

Great, thanks for that. Just as a follow up on that, I think you also stated that you need to recruit some new personnel for this larger data center orders. But you also think that you will start to recruit more broader?

Yeah, in some places, absolutely. I see more and more when I'm out on the social media and looking, I see several branches within Bravida who is now hiring. And I think this is a fantastic opportunity for talents in the industry or in adjacent industries that want to be part of a historical moment to to build new exciting things that can help the society to develop. So if you know someone who wants to do a career change to a market leader in an industry, they are welcome to Bravida.

I agree.

I will look around. Just lastly here, timing on the latest data center project, the COBOLA, if I pronounce it correctly. Have you anything to say about that?

No, it will actually start in... It's not an exact date, but let's say it will start and ramp up a bit in the third quarter, and then it will be ramping up throughout September, October, November, and I think then it will be full steam ahead until it's finished.

All right, I'm finished. Have you said anything about

Yeah, I think we said from 2029. So it's not decided to 100%. But in the beginning of 29, I guess.

Thanks. That's all for me.

Thank you.

The next question comes from Anders Ekerblom from Nordea. Please go ahead.

Yeah, hi, good afternoon.

Just a few questions from my end. Firstly, it would be interesting to hear you elaborate a bit on sort of how the competitive landscape is sort of reacting now that the market is improving and returning to growth. Sort of the contracts that you're signing now and maybe some of these larger projects in the pipeline. How do you see that developing from a competitive standpoint, from a margin standpoint, would be interesting to hear.

I don't know, but I expect that they also see some kind of light in the tunnel. What we are saying or telling our people internally is that the prices will go up soon even more. If you haven't noticed it, be careful. Protect yourself in contracts through index clauses, whatever. Price a bit higher because I think that the market will develop to the better. and I hope our competitors see the light as well and that will of course create a better environment in the whole market and that will be another support for our margin development going forward but I can't see anything yet and I guess if you look and ask all the 300 branches within Bravida I think they have different pictures of how the market looks right now So that's why it's so important for us to tell them that the turnaround is around the corner and it might be next month in some areas and it will maybe take another quarter or two in some other places before it turns and maybe it's not turning at all. So we need to stay focused on the cost, make sure we're doing the right things, working with the right customers who can pay because I think the last years have shown and learned everyone that doing business with partners that it's not financial stable is a stupid thing so we're looking to partners that wants to work with us and can pay and I think the partners is that's why they're hiring Bravida as well and I think we have an advantage compared to some of the competitors because we have a financial stability when it comes to slightly larger projects that not everyone has so that is important those contracts so I'm looking forward to the pricing environment going forward but we haven't seen it yet

Yeah, no, it makes a lot of sense on the pricing side. I also wanted to follow up a bit on sort of your capacity to support these larger projects that are coming through. I mean, could you give any more detail on sort of the split, the actual sort of split between sort of internal headcount and subcontractors or new hires? Since you don't want that, of course, to cannibalize on your bread and butter business. how many of the employees, so to speak, for the Echo Data Center, as an example, are sort of subcontractors, if you're able to say.

No, we don't have an exact number for that, but again, I think you said it, it's some kind of optimization between our own resources. Of course, we want to have a core in those projects with our own resources to know the Bravida way, how to produce, so we get the reporting in place, so we are actually able to be in control of the projects. That's one thing. Then you can subcontract some of the things. And the mix there is different from Norway to Finland, maybe. But again, it's so important to continue to serve existing and loyal customers and partners that we'll be doing. We will continue to do that. Then we can hire new resources locally, of course, to take in local organic growth. And then we are sourcing some from the subcontractors.

I don't know we don't have an exact numbers but we the majority will be external resources at least that is something I can give you a lot more than that maybe okay thank you Mattias appreciate that finally just on cash flow you mentioned it briefly but if you could elaborate a bit on sort of I mean the slightly weaker sort of cash flow in the quarter and Maybe when we should expect some of these milestone payments, et cetera, to be reflected in growing year-over-year cash flow generation.

Absolutely. So on our cash flow positions, we do have a good cash flow. So the net debt EBITDA is, as we mentioned, 0.9 excluding the leasing. So it's a very good cash position. In the comparison in the execution and just the operational cash flow that we are measuring, that's where you see the fluctuations. So we do have Thank you very much. to show a large contract in play with coming in with, for us then in the cash position, large advances for the contract. It's not, it's just normal advances for the contract. It's just much bigger contract and then execution on that that takes it down. Right now we are in the execution of, for instance, the bypass Stockholm and some other, a couple of other large contracts, but that one is the one specifically creating this cash flow fluctuation. We are expecting the new contracts, not just expecting, most of our new contracts do have a advance with them carry on. But when you have the smaller, you won't have the fluctuations in the same way. You will actually have it just small fluctuations on the top. But with large contracts, we are expecting that it will be visible for all of us when advances are coming in and we will have stronger cash inflow. To the specific Bypass Stockholm, they are paying on their acceptance terminology and on the execution. So that's working absolutely to plan. And it's going to continue working to plan. Where you will see Bypass Stockholm picking up, it's probably somewhere, well, it's picking up already now on the positive side in the next quarter. But then you won't really see it because you see the entire Bravida. I will see it, but you won't see it externally. What you will see externally maybe from the bypass is somewhere 27, but that depends on the other cash flow coming in. So if we have large contracts going in and out, it's difficult to see one single contract, how it behaves. But we are absolutely expecting cash inflow from the contracts we are signing with advances. And on top of that, we are expecting, for instance, the Sus Stavanger Hospital, if that comes to a closing, that might give a cash inflow as well. But we want to wait and see how that develops.

Yeah, I agree 100% with what Petra is saying. But I think if we take a step back and lift the discussion a bit, we know that we have a cash conversion at around 100% for the last five plus years. Yes. And when we have this large contract going forward now, I think the variation in a certain 12-month period will be even bigger. So I think we need to, or you, need to look at the cash conversion in the longer periods as well because... Let's say that SUS, the Stavanger University Hospital, had decided to not appeal the ruling we got in Q2. Then we had a big inflow, and then the cash conversion, I guess, had been fantastic. Now they haven't decided yet, so let's see what happens. On the other hand, we know that we have large contracts with the big inflow coming for the coming quarters. I think the cash conversion is a bit low momentaneously now, but if you look at the longer period, it is where it should be.

Yes, and we do think we should be looking at it for a longer period in order not to be too happy now if we get a lot of cash inflow.

Yeah, thanks a lot for that detailed answer. Just really quick follow up on that. I mean, could you share anything about the advanced payment sort of what share? Thank you very much.

I'll get back in line.

Thank you so much.

The next question comes from Johan Dahl from Danske Bank. Please go ahead.

Just a quick question. In your PMO special projects operations, obviously they've been quite successful recently, but if you look on the work they're doing right now, is that projects that are in a similar time frame, i.e. from 26 to 28, 29, or Is that capacity already filled in terms of data center work? Are you looking more towards replacing these major orders that you announced recently?

No, but I think with the central PMO we have is the reason why we can win those large contracts together with the local organization on country level or regional level, whatever. And of course, we want to continue to develop that part of Bravida as well. and as always we are building it in a solid way from the ground you need to start with a base before you go to the next level and we have been doing that for many months now so we have extended the team we will continue to do that and of course we want to maximize the opportunities we have in the market

But I also think, and I also think because I agree to everything out there, I also think that what we are leveraging is the know-how on how to execute on these large projects. Then when adding new projects, that's really what we are leveraging so that the team that we have in hand is taking in other resources that they are building on, but still using the know-how that we have in the PMO. So it's not like we cannot take in more contracts. We can still do that even if it's in the same timeframe and not all the contracts are in the same timeframe, I would say.

But then I would say that it's when I have the chance as well, and this is to our own branch managers as well to the competitors, I guess. This is a different type of sport. If you don't know, I think I told you in a meeting, was it last quarter review, was it some kind of capital market days in some of the banks where We actually said no thank you to one client because their contractual terms is too tough. You are risking the whole company if you're working with this company. So if you don't know what you're doing, first you need to know how to build it, but then you need to understand what contracts you're signing. If you don't have a legal or a couple of legal persons hired internally who know the risks in this industry and know what risk you're willing to take in your company, then you should stay away from this type of business, I would say. All right.

Just a final question on installation Material Cost Inflation. Would you argue that that had a material impact here in Q2 or is that still ahead of us and how have you mitigated that if at all?

No, but it's part of Q2, but I think it's still ahead as well. I think it depends on when the agreement is expiring, when you are signing new agreements. Some agreements are expiring in Q3, then you have to sign new agreements on new levels. Our central procurement team is of course working hard to make sure that we get the best terms possible, and then we have the best terms in the industry. and that is what they are hired to do and they will continue to focus on that then you have an information side of that work as well when they see that they can't maybe keep the prices down then we have a structural way to train and inform our branch managers region manager the management how to price and protect themselves in the contract so I think it will be part of our business daily business until the core of that problem is solved.

Thanks, Philip.

Thanks.

The next question comes from Jacob Soderblom from Carnegie Investment Bank. Please go ahead.

Good afternoon, and thank you for taking my questions. I have two main ones, and I'll start with one then on the ethnology. There have been some questions already on it, so I'll keep it short, but are there any clear comparisons or differences compared to, say, the Green Mountain project that you also announced regarding, say, the facing of the revenue or the contract structure that you can tell us more about?

Again, we want to be a bit careful about what we are disclosing and not, but pretty similar. There are some differences, absolutely. For example, it's some differences in design, who is delivering some of the large critical material, etc. in perspective of time when it should be starting and ending. I think it's pretty aligned, isn't it?

I think so, yeah. And on the revenue side, we're taking a percentage of completion. So as we build and go, we're taking the revenue.

Okay, that's good. Thank you for that. And also just think about and trying to understand how extraordinary this momentum is that you're enjoying this business right now. What can you tell us about the sales funnel going forward? Is it that you have checked these boxes here in these number of announcements that you made and it's more of a gap until the next one? What can you tell us about the momentum?

No, but I think the momentum is strong. I don't think we know very much more about the market than you do. But of course, we hear about plans. Again, we are preferring to work with partners. If we can continue to work with some customers, clients for many data centers ahead, we are preferring that because I think that is an absolute win-win situation. You know what they want to have built. We can help them. They know that we know, etc., etc. So there will probably be a lot of opportunities, but we are thinking long-term and try to do the smartest things for us and the clients to make sure that we are creating a long-term partnership. But we know that the plans in this industry are very interesting going forward as well.

Thank you for that. Yes, the final one, perhaps someone may add. If you could just reiterate the message you had on Denmark, how should we view them for the improvements in the margin from here? Is it more internal work to be done through efficiency measures, or do you say that it's probably more volume-based, the developments coming from here?

Yeah, of course, there is more work to do internally. I think I normally say that we are never happy about the result. We can be proud and we think it's, of course, nice to be able to present a good, great report like this. But there is always more things you can do. We, I am absolutely expecting a margin improvement in Denmark for the coming quarters as well.

We are, absolutely. If you just go back on Denmark's story, so they are already executing on a plan, taking in new, and they have already taken in, so it's not the start of the story, it's an execution of the story. They have taken in new orders, thinking about what margins should we take on, what risks should we take on, and those new contracts are executing well. They still have a little bit of legacy left. So that's why the margin doesn't pop up right away. It has to work through some cycles. And of course, they also have the cost side to work as all of us do. But that's not really the big part of their story. The big part is to transform the business which they are doing. I would say. Yeah.

Perfect. That was all for me. Thank you for taking my questions.

Thank you. Thank you.

The next question comes from Hala Zaruk from ODDOBHF. Please go ahead.

Yes, good afternoon everybody and thank you for taking my questions. I have two follow-up questions on the financial impact of the new project. How should we expect the 4.3 billion to be faced over the 2026-2029 period and what revenue contribution should we expect from this project in H2 2026 and in 2027? And in terms of margin, we understand that the margin profile of this type of contract is, let's say, above the group average. Does the project include indexation or price adjustment mechanism to protect margin against cost inflation? Hi Hela, it's good to hear from you. So as you know, we will not be able to go into the details of a specific contract like this is.

But we do have, and I think you could take that too, we have said that the execution of the contract is starting somewhere end of Q3 and then we are expecting the execution to continue to end of 2028 and perhaps into beginning of 2029. So that's the execution profile. I can't really go into the specific profiling per quarter or year on where the revenue will be, how much, since that is part of the contractual execution. And unfortunately, I also cannot go into how it will contribute to the EBITDA margin. But we have communicated earlier that these contracts come in with a higher margin typically, There's a bit of higher execution risk since they are long term contracts. They run over long, many years, right, or several years. So that's a bit of a risk. So it all boils down to how well we execute. We are confident that we have a good execution muscle. But that's what I what we really can say about the margin, I would say. I hope that's helpful anyway.

Okay. Thank you very much, Petra. Thank you for your answer. Thank you.

Thank you.

There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Thank you all for listening in. Again, I'm not satisfied but I'm very proud of being able to present this great report together with Petra and I'm so proud of all our employees who have been Fighting, struggling, done so many good things and all the hard work they have actually contributed with throughout the last two years and now it's finally paying off. So really proud of the Hold Bravida team and also grateful for the trust we get from all our important customers and clients as well. So it's going to be really exciting to lead Bravida after the vacation as well. Because vacation is starting tomorrow for us, isn't it?

It's starting tomorrow.

Yeah, hopefully. Let's see. So we get a couple of weeks off and then we will come back even better after that. So thank you all for listening in and have a great summer.

Thank you.