CAG Group AB (publ)

Hej och välkomna till dagens webcast med CRG Group där vd Åsa Landén Eriksson kommer presentera rapporten för det andra kvartalet 2024. Efter presentationen så kommer det hållas en Q&A så om ni har några frågor kan ni skicka in dem i formulärt till höger. Och med det sagt så lämnar jag över ordet till dig Åsa.

Tack så mycket Ludvig. Jättetrevligt att ni har valt att titta på vår webcast där vi ska presentera vårt Q2. Det är fram emot det. Åsa Landén Eriksson heter jag. Jag är vd på CAG sedan 6,5 år ungefär. Jag hoppar rakt in i chottet. Många av er har säkert sett den här bilden många gånger. Det har inte hänt någonting egentligen sedan förra gången. Vi är fortfarande 10 självständiga dotterbolag fördelat på ungefär 450 medarbetare And we work with Carnegie as an analysis and investment partner and corporate access and also liquidity guarantee we have via Carnegie. So that's what we're happy about. And just briefly before I present the results of what we do. We work as IT and business consultants and we primarily work with system development including project management, test and test automation, a lot of analysis within BI and touch on AI of course. mycket inom finanssektorn, anti-financial crime, anti-fraud, anti-money laundering, betalningslösningar, verksamhetsnära systemutveckling. And we also have about 20% of our business that works with operation and administration. And there we also run a SOC that works with proactive security surveillance. And to that we have a company that works with cybersecurity and everything from pen tests to code surveys to regulatory survival, ISO 27001. DORA regulation for the financial sector and a lot related to the scary environment out there with cyber attacks. So we have a lot of competence in it. And then we also work with systems engineering and systems lifecycle management. It's a lot within the defense sector, but also a lot of infrastructure projects, big projects. It's about everything from the specification of a system to implementation, demand management, purchase and development. And then we also have e-commerce and product information systems that we work with in both Sweden and Norway. And this time in my presentation, I don't have a specific AI picture, but we work with AI in all of these areas. Not least within our management, we are very active and help both ourselves and many, many of our customers. Many are fund managers, but also larger law firms and so on, with the implementation of Microsoft Co-Pilot in the internal IT environments, where you can save a lot of money. Tid till exempel inom Teams-lösningen där man kan be AI att sammanfatta möten och så vidare på ett extremt effektivt sätt. Så mycket AI här. Tittar man på våra siffror så har vi haft en god tillväxt och en stabil och ökande lönsamhet och jag kan passa på på den här bilden att I would like to point out the figure in the lower right corner, which is 95, and that is our Great Place to Work Index. We came in third in Great Place to Work for large organisations for the second year in a row in April, and we are of course very proud of that. It helps us to recruit. You can also note this figure of 20%, as I just mentioned, recurring income. It is a lot of management and management income, but also a lot of other tasks a rolling longer contract, often a three-year contract. So we have a good mix in that way. Even our consulting business, I can point out, I usually say, it is very long-term, many tasks are very long-term, or long-term I mean, and on the other hand, they can be said to be a little faster in terms of contracts than our contract revenues. So that's how it looks, and with that said, I go into the quarter, and Vi levererade en stabil marginal och det som var trevligt under kvartalet var att vi också såg ett ökat affärsflöde. Det har hänt mycket på affärssidan, det ska jag komma in på sen och berätta lite mer om vad det är för affärer vi har tagit. Men vi såg i alla fall en liten tillväxt i kvartalet på 1,4%. It corresponds to about this extra working day that the year had compared to previous years. But it was counteracted by the fact that our under-consult business has dropped a little more than our own business, so to speak. So with the exclusive under-consulting, we grew by 2.5%. No big numbers, but of course more than... many of our colleagues in the industry and we are still happy with that. You can also note that it was a slightly divided market, so to speak, but system development continued to be a little weak, but bright. och en väldigt bra marknad inom försvar och samhällssäkerhet och också bank och finans. Marginalmässigt så innebar det summa summarum att vi landade ganska nära föregående år. Själv vill man ju alltid slå det såklart, men 8,4% gjorde vi stabilt och bra. Och jag vill också passa på att påminna om att vi... Håller vår vinst per aktie väldigt stabilt och det känns ju bra. Det vill säga vi har gjort förvärv genom åren men det har varit värdeskapande förvärv så det känns skönt. Och vinst efter skatt är också väldigt stabilt. Summa summarum for the first half of the year, very stable revenues, a small negative growth, but a little positive growth, exclusively under the consulting business. So far we have not made any acquisitions, which we always work with, which I will probably come back to later. But we have an EBITDA margin that is 1% after the previous year, but still at a nice level of 8.8%. And what more can I say? We distributed money in May. Approximately 3.6% in direct issuance, 3.90 per share. We have a very stable financial position with good cash and low reward. And we absolutely intend to continue to be able to pay out distribution in the future. And so far we have succeeded in the last few years to have a progression in the distribution as well. So that's what we're happy about. Bra för aktieägarna. Och det kan man också se här att vi har en stabil trend i omsättning och också en stabil vinstnivå. Lite svagare marknad här som har bidragit till en något lägre vinstnivå här på de senaste kvartalen. Men det hoppas vi ska ljusna här då framöver. So, as I said, we have done a lot of business and especially we are happy for the first project, which is for a very nice but also secretive customer. I can't mention, but it is located within Fintech and there we have had a comprehensive system development. which applies to several consultants and what we are very happy about. It will hopefully continue for a long time and maybe also if we do a good job, which I am completely convinced that we will do, then there may be opportunities to grow. So it feels really good. And we have also, as we have press released a little earlier this year, written an agreement with a new Norwegian customer. We have many Norwegian customers within Pim and e-handel is a hydraulic equipment company in a large part called Cerve Group. Not least, we have also added another fund management company to our fantastic customer base in the business and management area, Spiltan Fonder. Och ett litet och nystartat bolag, men väldigt prestigefyllt, är också Industrikraft, heter det bolaget, inom drift och förvaltning, som ägs av Stora M för all fall och all boliden, SKF och Volvo, och ska jobba med Sveriges energiförsörjning. Så vi är otroligt hedrade av att få... And then it's also very nice for our security company and the work we do on that front within cybersecurity, which is incredibly important, that we have received many new contracts within Pentest for both public and private customers. Even many initiatives within the DORA regulation, Digital Operational Resilience Act, which is to ensure the financial sector's IT environment. So it has been a nice business flow and of course increased revenues within cybersecurity, so that's good. And if you look at the existing customers, Jag pratade lite om det i början då att vi har många projekt inom Microsoft 365 Copilot för att hjälpa kunder inom det. Väldigt spännande och vi har också fått många nya uppdrag, jag håller på att säga som vanligt då, Offentliga kunder, till exempel Riksgälden, Skolverket, Bolagsverket, Trafikförvaltningen, Rikshydrasförbundet, lite extra roligt. Jag skrev om det i vd-ordet, ska utveckla en AI-driven chatbot bland annat som vi ska hjälpa till med. Så det är roligt, det rör på sig. Nordelandsförsäkringar Nasdaq, inom industrisektorn, i vd-ordet lyfter jag fram två av de där, Candela som gör elbåtar och Xylem som gör vattenpumpar och lösningar kring det. Mycket trevligt att få göra projekt som bidrar till en bättre och hållbarare värld också. Så det är roligt. Och också som vanligt, We are very proud that our business at FNB continues to grow. Our mission in the army, air defense, healthcare, very nice. And also within the defense industry. BAE and SAAB both have very full order books and a lot to do. And we deliver several different competencies to them. So an increasing business flow during the quarter, which is nice. And that means that we have increased our presence in the defence sector in a broad way. Now we have divided up the authority side and also the industry side, so that 33% of our income is returned to that. Man kan väl notera att då övrig publik sektor har minskat lite granna eftersom det har varit lite svagare marknad inom systemutveckling och många inom övre offentlig sektor har haft lite pressade budgetar på grund av inflationen. Men vi tror att det kommer att... It's starting to look brighter, both in the public sector and in the private sector. So that's what I can highlight here. I'm not going to stay here for long, but if you haven't seen it yet, we're very proud that we have so many lovely customers. We're very happy about that. Looking forward, I think you can see continued increased activity on the market, a stabilization in demand in system development, continued solid demand in the defense sector and also in banking and finance. It is of course a sector that can be a little more volatile than the defence sector. The defence sector in opposition to banking and finance is therefore relatively slow-moving. So even if the demand is high, I usually say that there will be no explosion in demand, but it is on the rise and we have a super good position therein. So we have seen lower price inflation, lower wage inflation, and I think we will continue to do so. And so do the other trends, that is, a lot of regulatory driven work. We will work a lot with CSRD here in the fall to position CRG in front of the new requirements that will come. And then we look, as I was talking about, of course, at acquisitions. It's been a while since we did something, but we are very careful and very careful with that it will be a good acquisition so that you as shareholders get value from what we do with our resources, so to speak. So that's probably the outlook that we see and think will continue into 2025, these trends. So with that said, I'm just going to end with my usual story about why you should be an shareholder in CEG. Yes, we have a very nice, balanced sector mix. We have a good income mix in such a way that we also have 20% recurring income. We have very good technical areas with solid demand and senior competence. Vi är förvärvsdrivna och det vi har där framförallt är vår decentraliserade struktur med självständiga dotterbolag som gör att vi är ett bra hem för många bolag som behöver synergier och struktur men ändå vill driva sin egen affär på ett bra sätt. Vi har vår utdelning, vi har väldigt fina ägare, hög andel internt ägarskap. and good support from Carnegie. With that said, I think it's time for questions.

Thank you very much for the presentation. As you mentioned, we jump into some questions here. Considering the negative growth during the first half of the year at minus 0.4%, how do you see the opportunities to return to a positive growth during the rest of the year?

Well, it's definitely our ambition to do that. Now it's the same number of days here in the second half of the year. It is in itself so that we had a pretty good market during the last half of the year. We were a little... Vi höll oss längre än våra konkurrenter och hade nog först lite tufft i Q1. Så vi får väl se hur vi klarar av det. Men definitivt så vill vi ju växa. Och som sagt, vad med det här ökade affärsflödet och de affärer vi har fått igång här nu i augusti, precis i dagarna, så tror jag att vi ska kunna klara det. Men jag vill ju inte... Ja, det ska vi kunna göra, tycker jag.

How do you work to optimize the cost structure in a more challenging market?

We are always stingy and careful with our money. There's a lot we can do. We've also written a report with a highly conscious strategy. We haven't made any cost savings programs for our employees, because we think we have very good competence and are convinced that it will be needed when we market it. So we're happy about that. But of course, we're perhaps more careful with conferences and other costs.

I understand, thank you. A bit on the same track again here, but the number of employees has increased during the year despite a weaker market. How do you balance the need to maintain competence with the need to adjust costs?

Yes, I think I have already answered that. We don't see our employees as a cost in that way. It's a hard way. But of course, we have to be able to provide the employees with good work, so that they also feel that they are worth it and that we deliver what we should in the form of financial results. So we... We are very careful when we recruit. We get solid competence, consulting people who fit in and who we are convinced can deliver. And then there is always a little trick. meet exactly the right recruitment timing and demand so that it matches. And I think it feels like we have succeeded this time when we have been persistent and long-term in how we have seen the employees during this a little tougher spring.

Thank you. Do you have any plans to expand in Norway and in that case organically or through M&A?

Primarily, we think that there is a lot to do in Sweden before we take another country, but we are always open to suggestions. If we go to Norway, we think that we should strengthen our e-commerce part, which has a lot of businesses there. You know, the mortgage and so on, and the mental health pharmacies and Max on construction trade and so on. Or CG Syntell within the defense segment, Systems Lifecycle Management, who also works a lot with different parts of the Norwegian defense and the Norwegian FNB. But we look more in Sweden.

Thank you. And you mention a little bit here during the presentation about acquisitions. And you mention in the report that you have good conditions for acquisitions. But what does the acquisition strategy look like right now? Do you have any special criteria to identify and find these successful acquisitions? Or what can be a successful acquisition, so to speak?

Yes, we are of course interested in strengthening what we have. We think that we would like to be able to make more acquisitions in the defense sector, but also banking and finance, cybersecurity, system development on various fronts can also occur. We are actually looking at mycket på bolagens storlek men framförallt på kultur och på ledningarna och ägarna som ofta är kvar i bolaget att de har delat våra värderingar och är sugna på att komma till CAG och få en struktur och få kolleger och synergier i form av ramavtal och kundkontakter och trevliga smarta kolleger. Så vi tittar väldigt mycket på on softer factors also when it comes to acquisition.

Thank you. You have signed new agreements in several areas, including AIG and cybersecurity. How do you see the potential for these areas to drive long-term growth at CIG?

I think generally that we have very good areas and that we have a good balance. And of course, a lot will happen in AI. Then it will come in, as I usually say, different flavors. So that all our areas will get growth and new types of projects that we will execute in a little different way, maybe, when there will be more input of AI in the work. But it's... I usually say that there is so much to do in our projects and with our customers that it will not end. And the cyber threat is unfortunately also there to stop, so it is clear that it will also continue to grow and become important in all sectors, of course.

Thank you. If we move on to the last question here, what should investors keep an eye on in the next 12 months? If there are any special triggers or something to follow?

It's hard to answer. We think and hope that interest rates will go down in the future and that the public budgets will be strengthened a little bit. So that you can keep an eye on the economy in general. But for the rest... we see a nice progression here in the future, because the underlying needs in the industries where we are active, for example in the security sector, but also with anti-penning, laundry and payment solutions and cyber security, as I mentioned, and various AI aspects, will continue to be in question. I don't know if I can come up with any other trigger, Fortsätt att vara allmänt informerad och hänga med i ekonomin och samhällsdebatten.

Det låter bra. Stort tack Åsa för att du tog dig tid att presentera här och svara på frågor. Tack till alla som har tittat. Ni får ha en fortsatt hele vecka här.

Tack Finnweier och tack alla som har lyssnat.