CAG Group AB (publ)

Hello and welcome to today's webcast broadcast where we have with us CAG who presents its Q1 report for 2021. With us today we have the CEO Åsa Landén Eriksson who will present and also answer questions during the question time after the presentation itself. And if you want to ask questions, it is good to use the form that is on the right of the broadcast, then we as I said take it up after the broadcast itself. And with that I leave the floor to you Åsa, please start your presentation.

Tack ska du ha Martin. 2024 Q1 är det absolut som vi ska prata om idag. Det ska bli roligt som vanligt. Kul att ni som lyssnar är här. Åsa Landén Eriksson heter jag. Som sagt var numera med sex år på CAG på nacken. En kort inflygning om oss tänkte jag göra för er som möjligtvis lyssnar för första gången. Sen ska vi gå in på kvartalet och andra relevanta saker i närtid. We were founded in 2005 and now we have about 450 employees. We are in 10 subsidiaries, mainly around Mälardalen, but also in Östersund, Krokom, Borås, Linköping, Karlstad and two small offices in Oslo, where we have e-commerce and defence related business. I'll get back to that later, but we've had the pleasure of updating our Great Place to Work logo. If you look at what we do at CAG, you may know that we are an IT consulting company, even with 20% management and operation. We work a lot with system development, project management, test automation. We work in the financial sector with the so-called AFC. We counter both welfare crimes and fraud in the banking sector. Penning, laundry, we work with payment solutions. Within our operations and administration, we work both with networks and communication and with servers. storage, both in the cloud and on-prem, as it is called. And we work with computers and networks and advice via Service Desk. We also have, which brings this over to the cybersecurity area, a proactive security surveillance for our sales customers on the day they buy that service. A SOC, as it is called. And at Cybersecurity, we work with the entire scale from information to IT security. And within the defense segment, we also have a large specialist institution called Systems Engineering and Systems Lifecycle Management, which deals with the entire lifecycle of the acquisition of materials or systems, from the wreck to the death, so to speak. A lot of documentation as well. Of course, affected by NATO here. A lot of exciting things happening. We also work with analytics, which borders AI, by the way. I'll come back to that. And we work with e-commerce. Both clean e-commerce and product information management, which is to fill the sites with necessary information so that you can keep track of all articles in such a business. It can be both business to business in companies that maybe sell internally, if you describe it that way. That's what we do, so a lot of broad and technical-oriented, but also not just code hacking, but also a lot of business-oriented development and projects. We have the privilege of having had a very nice development here over the past seven years. We have grown by about 15% per year and we have increased our margins. You will soon see where we end up in Q1 if you have not already put in the report. I was going to go straight to that, and that is that we are actually making a margin in this quarter that is exactly the same as we landed on the whole of 2023. We did 9.2%, which is a good margin from a historical perspective. We had very tough comparison figures, we did 10.8 last year, but the year before 8.8. We made a good margin, but if you are a contestant and a winner, you can't be really satisfied with the decline in turnover. Det beror på att det var en arbetsdag färre i kvartalet, vilket påverkar oss som konsultverksamhet såklart. Är det färre timmar att jobba så blir det lägre intäkter. Men det beror också på att vi har sett, som vi flaggade för redan i Q3, tror jag, if not earlier, set a slightly weaker market in the so-called upper public sector, so not in the defense sector, but a slightly weaker market. This affects primarily our under-consult revenue, but also a little bit of our own investment, our own employees' tasks, so to speak. So that's what has made us step back a little bit, and it was of course our ambition to compensate for this weaker market with other growth, but we think that we will be able to do that again next quarter. From the look of this picture, that we have stable results with bright views, I come back a little bit to why we say that. I övrigt är det bra tal. Vi har lite kalendereffekter i cashflow men den flyter på som den brukar. Vi är lite fler faktiskt. Någon medarbetare fler än när vi stängde förra kvartalet så det känns ändå bra att vi bygger kapacitet. Vi tror på framtiden och det är viktigt att vi rekryterar kompetent personal. Vi vidmakthåller en hygglig vinst per aktie. So with that said, I would also like to invite you to CEG's voting. If you are a shareholder, we would really like you to come to the voting. It is the 7th of May at 4 p.m. on Conventum on Kungsgatan 9 here in Stockholm. You have the opportunity to come and all information about the registration and so on is on our website, ceg.se. And I took this picture with me because I wanted to invite you, but also because we will soon be paying out this allocation, if not the vote against all assumptions, says the other. And it's a little nice too, because we are an allocation company and would like to have this allocation progression, which is nice, I think, even I, who is a fairly large shareholder, right outside the 10 list. Jätteroligt, jag nämnde i början här att vi hade fått anledning att uppdatera vår Great Place to Work-logga där på första bilden och i förra veckan i torsdagskväll var det stor gala som firade alla vinnare och listade bolag och inte minst pallplatser då i den här medarbetarundersökningen. Det är en otrolig ära att få behålla pallplatsen från We have enormous numbers based on what our own employees think. I have said this many times, but I can say it again. Even if the market is a little weaker now, it is very important that we recruit a Från en kompetensbas som ändå inte är jättestor så behöver vi rekrytera riktigt kompetenta och vassa konsulter. Det här hjälper oss att göra det. Vi är jätteglada och har också fått ett kvitto på allt arbete som vi gör här. Jag själv och alla våra medarbetare och ledningar i våra dotterbolag jobbar jättehårt för att vi ska vara en bra arbetsplats. Och kunna ha den här fina kompetensen som våra kunder vill ha och köper. So we were super happy to celebrate with different activities. A little bit about business. As I wrote in the report, you have to note that there is always a good business flow. We take new businesses and new contracts. This quarter we have written a contract with Icano Bank. Vi har skrivit ramavtal med två myndigheter som jag inte kan säga namnet på. Så brukar det fungera. Man kan inte använda våra myndigheter i marknadsföring på det sättet. Speciellt inte om det är de här kärnmyndigheterna. We have written a report on penetration testing, which is super important now when there is a lot of cybercrime out there. So you need to defend yourself properly, and we help with that. So it was very pleasing. Then there are a few more examples here where I want to highlight the first point that we of course give advice to our customers regarding Microsoft's upcoming AI complement to its 365 environment. Then it is simply Word and Excel and Outlook and Teams and so on that everyone gets a so-called co-pilot function if you buy a license for it. Det är jättespännande och engagerar oss själva och många kunder. Så är det någon där ute som lyssnar som behöver hjälp med det så kan ni höra över till mig eller kolla in vår hemsida. Vi har en ny flik under tjänster som heter AE1CG och där hittar man kontaktpersoner och så vidare. And then, as I said, there were several other new projects within the financial sector, I can mention IKANO Bank, and I was about to say, as usual, Handelsbanken, Swedbank, Folksam, Säkra inom Försäkringar, Riksgälden, Nasdaq, and also many DORA companies. And what is that then? It is the Digital Operational Resilience Act, which deals with IT and information security within the financial sector. And that is a perfect area for CAG, where I dare to challenge our competitors. I think there is someone who is equally well placed with a lot of knowledge within banking and finance and a lot of cyber security. So if you need help with that, you can reach out. Within the industry segment, there are also a number of good projects on Tobii, Saab, Atlas Copco, Scania and so on. And also, I was about to say as usual, FNV, Svenska Kraftnät. There is a good business flow going on, even if it is a little weaker within the so-called general public sector. If you look at our income distribution, you who follow us have seen that we have made a small update here, which I have talked about earlier, but we have not clearly illustrated in the graph. Now we have taken out the defense industry from our industry segment. It used to be about 10%, but now the defence industry is 6%, the authorities 26%, and together over 30% of the revenue. That's how it looks. The weakness in the public sector is that we no longer have 50-50 between private and public sector, but actually 45-55%. On the other hand, we maintain our share of recurring revenues, which we have on three-year contracts or long-term receivables of about 20%. And that it is going well in the defense segment is partly illustrated by the fact that FNV, which is our largest customer, is actually close to 20% of our revenue. But it is a very good customer with lots of interesting tasks and a lot to do. Vi är jätteglada att vi får bidra i den sektorn, för det behöver vi. För vår frihet och demokrati känns det väldigt viktigt i dessa tider. Så ser vår intäktsutveckling ut, lite tydligare beskriven. Har ni varit med länge, har ni sett den här vepan också? Väldigt många fina kunder inom alla segment, vill jag påstå. Så jag stannar inte jättelänge, men ger er lite tid att ta in den här. Sen kommer den här presentationen att finnas på crg.se under IR också om man vill ta en närmare titt. A little bit of an AI update then. I have been doing this for the last quarter. There is so much happening in it, so I would like to highlight that we are participating in the swings, which is fast, it goes very fast. I actually made an AI-generated song myself, where we were going to celebrate our Great Place to Work at Hallplats. Den blev döpt till Office Party och var riktigt kul faktiskt. Och det går så fort att textprompta fram en låt på den här musik-AI-tjänsten som heter suno.com. Det visade sig vara riktigt kul att visa på kraften i de här lösningarna. I recommend everyone to wander around a little bit. It is both educational and exciting. But seriously, as I mentioned earlier, there are many of our customers who are very interested in what Microsoft will do in the office solutions. So there we can advise our customers to use strategies, it is license issues and it is of course security and policies around this so that you so that information does not leak out from one's own environment. Then we also work if you want to have that advice on large language models with insights and we can learn how to make good use of these and how to prompt the solutions to get good answers. också extremt imponerande hur fort det går att få fram ramverk och hålla sig till vilken fråga man än har nästan så får man en guidning till sitt eget tänkande som man sedan kan utveckla och rätta upp och så vidare. Det är fascinerande. Vi hjälper gärna till med sådana typer av uppgifter om man behöver det. Detsamma gäller AI inom cyber security. Det gäller både anfall och försvar där. Behöver ni någon som pratar AI och cybersecurity, ring mig eller mejla så ordnar vi en expert som kan prata om det på ett både pedagogiskt och roligt sätt. Det brukar vara bra om det är roligt för då blir det också pedagogiskt. And then, as I mentioned, within the financial sector, we work with the DORA regulation, and that is the most up-to-date. And we also have an AI model for gap analysis here, so you can get a faster answer to what kind of gaps you need to fill in order to fill up DORA. And within AFC, with financial crime, there is also... There is a lot of AI functionality in softwares, but of course you can also optimize your processes and code development and project management with the help of AI. And the same applies to system development, that you can get help Men man behöver också vara väldigt duktig på att formulera problemet och förstå omständigheterna kring en lösning. Därav att behovet av kvalificerade systemutvecklare inte kommer att försvinna. Och inom e-handel, samma sak, kommer jättemycket AI-stöd i våra plattformar, andra plattformar. När det gäller PIM till exempel, produktinformation, så kommer man kunna jobba kanske till exempel utifrån en bild på en kaffekokare och så vidare och få ut texter kring den på 200 språk. Så det finns jättemycket grejer som händer inom området och alla våra bolag och medarbetare ligger på här för att hålla oss på topp. This frozen fish image was generated by an AI engine called Leonardo and our marketing department. Given that we have reported Q1 today, you are probably also a little curious about why we said that there were brighter views in the future. Jag kan börja med det. Det är ju så att i det andra kvartalet så är det en arbetsdag extra mot föregående år, vilket gör att första halvåret kommer att vara en jämn spelplanantal arbetsdagar. Och vi ser också att det är mer... activity on the market. And as I said, it is constantly a flow of business, one can say. And of course, as we have mentioned earlier, there is high and good demand in the defense segment, both the authorities and the industry, and within the banking and finance sector. Även om det varit lite oroligt de här sista dagarna på börsen så är det stora vinster, jättestora behov. Vi tror också på en stabilisering i efterfrågan för en publik sektor här under det andra halvåret och redan nu kanske under Q2 lite grann, men mer under det andra halvåret. Det finns jättestora behov, inte minst inom cybersecurity, men brett skulle jag vilja påstå. Vi ser lite lägre prisutveckling, men också lägre löneinflation. Många underliggande faktorer behöver jobbas bland annat på de här direktiven och behöver hållas i antivälfärdsbrott, antipenningtvätt och generell digitalisering. Det finns många underliggande trender som driver vår efterfrågan. And then the last point is that we work as usual intensively with looking at new acquisitions. But it is a special area. Many stars have to be right. We absolutely want to acquire more, but you never know when the right case can fall in. It was a while since we made a bigger acquisition now, so we... Vi får se vad som dyker upp och det kan bli bättre förhållanden kring det framöver. Vi ser positivt på framtiden. Jag tror det här blir ett bra år. Och det är ju såklart så att vi också siktar mot de här finansiella målen och taktar mot dem. En miljard vid slutet av 2025 ska vi takta på och göra en marginal som är 10% av intäkten. We have a little bit left, but we're going to get there, quite simply. So with that said, just... I'll flash over to our investor story, which I usually end with. I think we have a great sector mix, a great explanation of defense, banking and finance, and also a lot of technical knowledge. We have recurring revenues within our operations and management, and a great customer base. And we have very interesting technical areas and senior competence. And we are going to acquire companies. Our structure is decentralized, which facilitates integration and also attracts acquisition objects. Companies that may not want to be bought by a 4,000-person company or a 300,000 companies can think that it is good to come to CRG where you, just like our employees, are seen, considered and needed as a single company in a decentralized structure with a lot of good, competent friends within the group that cooperate. So that's it with this. And with that, we open for questions, Martin, I think.

Yes, we do. Thank you for that presentation, Åsa. A lot of questions have come in, and we'll take the first question, which sounds like this. What kind of tasks were started by both FMV and the Defence Force during the first quarter, according to the report?

I can't say any details, but in general I can say that we work within all defence branches, so we work a lot with leadership systems, And we work with both aircraft, marines and army projects. And it is a lot of procurement projects where we work with systems lifecycle management. And it is actually to work from start to finish, that you look at the needs of the business, you demand, you divide the elephant into sub-projects. You are involved and formulate negotiations and implement them, make sure that you document solutions and in the long run you should also do a so-called decommissioning or decommissioning. But it can also be things that I have mentioned before, we work for example with the expansion of Sweden's capacity within air bases, so it's a lot of really business-oriented projects. And a lot of secret IT stuff as well.

I understand. What strategies do you implement to maintain a solid EBITDA margin of 9.2% despite a decline of 2% in your revenue?

We always work with being cost-effective. We work with prices first, to try to increase prices and see every time an agreement goes out. Many agreements can also be index regulated, so that's one thing. And then we adjust the costumes according to our income. So if it's a little weaker in some area, then maybe you can go and have a party in Hagaparken instead of going to the spa in Nynäshamn. So we are pretty good at it, I would say. We do a lot of fun and good things, both in terms of competence development and cohesion, but to a good amount of money, so to speak. And we also have low overhead. A small, small head office here, which I myself am one of four, basically. So it's also part of the margin of power and development forward.

What criteria do you prioritize when considering potential acquisitions? And how would you say that you ensure a strategic and cultural balance with then acquired units?

What a broad question, good question. Det är ju så mycket som går in i det. Förhoppningsvis har vi lite koll på bolaget redan när vi inleder en mer deeper dialogue about acquisitions. It is important to find out how the company stands and goes. Are they easy to do business with? Do they have satisfied employees? What kind of feelings do you get when you go with the management of the coffee machine? It is often the head owner you talk to. What is their motive for selling and so on and so on. And of course, we also mix in relevant people with us, who may have even more knowledge than I myself on the company. So it's usually a dating process before you decide on this culture part, it's more what you need to know about. Then of course we do a en bedömning strategiskt över hur väl det passar in hos oss, och hur skulle en kund reagera på om vi la till den här kompetensen till vårt nuvarande erbjudande? Skulle det hjälpa oss att sälja? Skulle våra övriga medarbetare bli jättenöjda och glada för, åh vad bra, nu fick vi in den här kompetensen, och det är duktiga konsulter, det vet jag. Den typen av frågor är det man behöver svara på, förutom en såklart finansiell och legal... I think that was the answer to the question.

Yes, I think so. That was a good answer. Let's move on. How does this agreement contribute to your growth strategy?

Yes, you should not exaggerate. It takes time before you get the framework agreement and turn it into concrete business, but all of these have concrete, ongoing tasks. But it is not the case that our growth becomes radically different from this, but on the other hand, it is very prestige-filled agreements all together. jätteintressanta uppdrag för våra konsulter. Och jag menar, man tar Ikanobank liksom, så jag tycker själv att det är extremt angeläget att vi hjälper till med penningtätsfrågor och så vidare, ser till att liksom våra, vår finansiella sektor är så isolerad som det går ifrån brottsliga handlingar, så att säga. Det är vi stolta över. Men det är många däckar små i vår försäljning, så är det.

I understand. Let's move on here. Can you give some insights about your AI initiative, including collaboration with customers and even workshops such as Microsoft Copilot and LLM?

Insights? Well, one thing is that this development is going very fast, so it means that alla man är på däck och är intresserade och hänger med. Vi har en gemensam slackkanal, alltså kommunikationskanal, där vi delar mellan alla medarbetare våra lärdomar och så vidare. Varje bolag har också specifika både AI eller generellt kompetensutvecklingskanaler så att man ser till att man hänger med. Men en personlig spaning är också att ska man få ut nytta av de här hjälpmedlen så vill det också till att man man tänker efter hur man kan förändra sitt sätt att arbeta och liksom är modern och på och funderar liksom man ska inte tänka så här jag kanske själv gjorde lite i början oj hur ska jag hinna med att kolla in det där det har jag inte tid med utan istället får man tänka nu ska jag göra den här grejen kan jag ha hjälp av AI i någon form i just den här uppgiften och det kan man ofta faktiskt så att Det är väl en insikt. Tänka efter hur man jobbar och vad man vill uppnå. Kan man då få hjälp av de här lösningarna? Det kan man ofta få.

We'll take a final question here. How have you maintained your position as the third best workplace among large organizations according to the study Great Place to Work? And what impact would you say this has on your employees' morale and productivity?

Det är ju jättepositivt. Det är våra egna medarbetare som har tyckt till om oss som arbetsgivare. Det är jag oerhört stolt över. Hur vi har gjort är ju... Mycket ligger, tror jag, i de här... Stora faktorerna. Vi är framgångsrika. Vi är ett attraktivt bolag på det sättet. Vi jobbar med områden som våra medarbetare brinner för. Och vi har den här strukturen med det lilla i det stora. Det är ju liksom grunden. Men sen utifrån det så är det ju ett Vi har alla en slags gemensam värdegrund och den behöver vi leva och agera utefter varje dag. Det jobbar alla i ledningen i det här bolaget jättemycket med. Mycket aktiviteter. Nära kontakt med alla medarbetare. Respekt för alla. Alla ska vara lika behandlade och kunna vara sig själva. Den typen av kontinuerligt jobb varje dag för att vi ska känna att det här är en jättebra arbetsplats där man vill vara. Det är många små saker och en del stora.

Good. Those were the questions we had received. I thank you for a good presentation and for answering all of our questions. I would also like to thank all of you who have followed today's presentation with C&G, who presented the Q1 report for 2024. I wish you all the best for today and until next time. Thank you for today.

Thank you, Martin and Finvair, and everyone who listened. Have a good one.