Projektengagemang Sweden AB (publ)

Good morning and welcome to the presentation of the project engagement results for the third quarter of the year, 2024. My name is Andreas Attegiorgio, I am the new CEO of the company since August 19, 2024. With me is my financial director, Liselotte Haglind.

Good morning.

First, a little bit about myself. I came last from the role as the CEO of the Stockholm Chamber of Commerce. I have also been an affiliate researcher at the School for Architecture and Social Development, KTH. I have been in charge of the foundation Affärsvärden and some others. A red thread in my career has been precisely urban development. Hur skapar vi morgondagens framgångsrika, hållbara, resilienta, innovativa, attraktiva stad och samhälle? and is very inspired to take on project engagement as CEO and CEO. I also work at the State Department, the World Bank's headquarters in Washington D.C. and have a doctorate in national economy at Lund University and have also studied and taught at the University of Michigan. This presentation today has ten pictures. Three images will cover the market and outlook. Three images will cover our three business segments. Two images will cover our financial position. The final image will cover focus, now and in the future. Of course, there will be time for questions. The building above the picture you see is from the Falköping City Building Award 2024, where we are proudly nominated. We have then shaped the building and the outdoor environment here as an architect. We start with a market outlook and here I want to note that it is still a waiting market. and a watchful desire to invest. This watchful desire to invest and the market situation is in its third quarter. Commercial properties continue to show a weak development and housing construction is still on low levels and this has affected us. Here we also know that there is a deterioration before a less straining monetary policy, that is to say, these interest rate cuts that have been carried out, can get a positive effect on the market. And just as we have said earlier, then these The effects of a somewhat more expansive policy will have a certain delay before we can see the effects. But what is positive in the long term is that we have a growing need for our expertise and our services. For those of you who saw the UNEP report last night, you can see that the world is going towards 3 degrees of warming during this century. And we know that the Paris Agreement says that we can achieve a maximum of 1.5% in heating to overcome the climate crisis, so all countries need to do a lot more. But what is hopeful, I think, is that it is still said in this fresh report that energy and technology make it possible to reach the 1.5 degree goal. And from our perspective, and what project engagement can deliver, it is precis vad världen nu behöver i form av en omställning inom energi. Vi ser också ett underliggande starkt behov av våra tjänster inom industri, försvar, stadsutveckling och så vidare. Det här kan vi återkomma till. Summa summarum, det är komplexa utmaningar som samhället ställs inför. Vår kompetens hos våra konstruktörer, installatörer, miljöspecialister, projektledare, arkitekter och andra experter behövs verkligen. As we talked about earlier, the green transition has affected the market, but also the transition into security, resilience and resistance. We also see that we have strong regulatory requirements coming from the EU, but also from other countries, which increases the need for our customers to develop existing buildings and their close environment. Sometimes, instead of tearing and building new ones, And when these changes occur, the complexity of these projects also increases. And then we see that we can really be a strategic partner for companies that want to change. Vi vet också att industrin ställer om till fossilfria lösningar, energibehoven ökar, det krävs snabba satsningar på solvind, vatten, NATO-inträdet för vår nation kopplat till underhåll av befintlig infrastruktur men också nya krav på nationell motståndskraft och civilberedskap. So, continued good demand and increasing needs in control systems, data collection, supervision, optimization of operations, for example in safety facilities and in general in buildings and their close environment. So, from outlook to insight. Our third quarter for 2024, we deliver an improved margin in a monitoring market. Despite the fact that the third quarter is the weakest seasonally for us, due to the high number of vacations, both with our consultants and with our customers, we increased the EBITDA margin to minus 4.6% versus minus 12% in the previous year. The underlying result, the exclusive cost of local adjustments that took place in the third quarter of 2023, is the result in line with the previous year. Under 2023, the company's staff strength decreased as an adjustment to a weaker market, which affects the turnover during the quarter, which is now 145 million. This is somewhat lower than expected due to a weak start rate after the summer. Partly due to delayed start-ups, the level of activity increased in September, which was good. The effect of the lagging market has affected the rate of debiting. This effect is compensated by increased tim prices and the good effects of our cost and efficiency programs. Two out of three segments show better margins. Vi fortsätter givetvis att rekrytera aktivt inom områden där vi ser bra tillväxtmöjligheter, bland annat inom fastighetsautomation, skydd och säkerhet, energi och miljö. Så, när vi avslutar kvartal 3 2024, då har vi, tack vare våra kostnadseffektiviseringar, en ackumulerad marginal om 4,8% och ett ackumulerat EBITDA-resultat om 27 miljoner. Now I want to move on and look at our three underlying business segments. We have three business segments. It is architecture and management. It is construction and environment, as well as installation. We start with architecture and management. There is still a weak desire to invest in commercial properties and housing, but a positive demand in industry, logistics and defense. Vi ser ett förbättrat resultat drivet av bättre kostnadseffektivitet och timprisökningar. Omsättningen hamnar på 48 miljoner och evita marginalen på minus 5%. When it comes to assignments, we have, among other things, gained trust from the region of Skåne for appointment assignments for Skånes University Hospital in Lund, as you can see here in the picture. Climate risk and vulnerability analysis to MKB Fastighets AB, which is Malmö's municipal housing company. arkitekturuppdrag för nybyggnation av gruppboende åt Orust kommun och ett vunnet anbud för utformningen av inredning av Försäkringskassans lokaler i hela Sverige. Vi styr verksamheten mot att tillvarata de behov som finns kopplat till hållbarhet, resiliens i stadsutveckling och att identifiera klimatrisker och behov av klimatanpassning av redan byggd miljö. Moving on to construction and the environment. Here, the market is still challenging, especially when it comes to new buildings. We see both delays and delayed investment decisions. The result is affected by a lower rate of debiting and slightly higher reservations in the form of project declines. Omsättningen slutar på 53 miljoner med en ebitda marginal om minus 8%. Vi fokuserar nu i högre utsträckning på de delar av marknaden där det finns tillväxtpotential och investeringsvilja, till exempel inom ombyggnation, hållbar nybyggnation samt rådgivning inom exempelvis förorenade områden. Vi tar initiativ för förbättrad projektstyrning. Under kvartalet har vi exempelvis fått uppdrag för ombyggnation av takytor och fasader på norra Älvsborgs länssjukhus. Utveckling av JMs nya koncept för flerbostadshus med trästomme i södra Stockholm. Projecting of the Valgärdet school in Karlstad, as you can see in the picture. And invitation with focus on circularity, soil environment survey and more. For Stockholm's water and waste relocation of Sätra recycling center. Finally, the segment installation. Here we see a continuous positive result development despite a lagging market. Omsättningen var 48 miljoner kronor och EBITDA-marginalen minus 5% i kvartalet. Kvartalet visar också en fortsatt förbättrat resultat drivet av kostnadseffektivitet, högre debiteringsgrad och timprisökningar. During the quarter, we have, for example, received an assignment on the renovation of several housing units for young people in Lund for IKARNO housing. For academic housing, we have received an assignment on energy measures and planned reconstruction of schools and preschools in Uppsala. We see an increasing need, among other things, for energy, control systems, supervision and optimization of operations within social housing. So, with these three pictures we leave our three business segments and I want to hand over to the financial director Liselotte Haglin who will tell more about the financial overview.

Thank you Andreas. Yes, then we move on to the financial development and summarize from January to September, where we have accumulated a better result than last year. EBITDA was SEK 27.3 million, which means a margin of 4.8% against last year's minus 0.2%. The turnover was SEK 574 million and the growth is still negative due to the adjustment we have made to the market by reducing our staff strength by the end of 2023. The organic growth was negative, i.e. rose to minus 11.9%. We have a calendar effect of 16 hours, but since that effect occurs during the summer period, it is of a smaller character. It affects the turnover. As we have previously clarified, it does not affect our EBITDA, since we prioritize the costs per month's working hours. Our FTE growth is still negative and the assessment remains that we will not see growth in 2024. However, we continue to recruit in the areas where we see that the market is profitable. We have recruited about 90 people this year. We are actively looking for more complementary expertise that is in demand from our customers. Vår resultatförbättring som Andreas var inne på beror framförallt på ett fortsatt gediget arbete med kostnadseffektiviseringar kopplat till våra lokaler och även omkostnader överlag. Det arbetet går bra, jag är väldigt nöjd med det och det är en viktig åtgärd för att på sikt kunna nå våra finansiella mål. Two of the three segments have accumulated a result improvement towards the previous year. Architecture and management and installation make a result that is 7 million kronor better than the previous year. In the segment building and environment we have a negative result development. It landed at 9.8 million kronor against the previous year's 16.9 million kronor. The declining market has affected the rate of debiting, which has accumulated lower than the previous year. We have a decline in the third quarter, when the start in August was affected by some delayed start-ups. And of course, this affects the efficiency even more. However, we still see the potential to increase our rating levels, and our ambition is to return to historical levels. As we have previously mentioned, 1% rating is equivalent to about 11 million kronor per year. Something that is still developing positively is our timetable, which partly compensates for our drop in our rating. We see good price increases in all three segments, and we have good processes and good strategies to continue to work with this issue. We are adjusting our revenue levels to be competitive in these areas that we work in and want to move to. It is important to balance against the increase in wages, which is our largest cost. Summing up, in September, the EBITDA result was 27.3% and just under 5% in the turnover margin. If we look at the financial position for the third quarter, the results per share were minus 0.29 to minus 0.84 kronor. The cash flows from the current business were 4.9 million kronor to minus 3.3 kronor in the previous year. This affects the repayment of paid taxes in the 23rd quarter and we also have positive effects this year from cash flows from customers as part of our improvement. Netept EBITDA is 2.3 times compared to 2.6 in the previous year. Here we move down to the debt rate. As I said earlier, it improves the work in our offices, our debt. Here we have not reached full liquidity yet, depending on the different lease contract lengths that we work with. Nettoskuld, exklusive IFRS 16, vid utgången av kvartalet är 131 miljoner kronor. Hela nettoskulden är 208 miljoner kronor. Med det åter till dig, Andreas.

Tack, Liselott. Fokus, nu och framåt. Vi utvecklar vår förmåga. Vi fortsätter att utveckla vår värdeskapande position på marknaden. And here, as I said, it is important to remember that the underlying demand is there, not least through the transformation. So we continue to work disciplined with efficiency, price, cost control. We work intensively with sales that will give us conditions for profitable growth. And we have improved our profitability in two or three segments in this quarter. And of course, we need to be able to attract and develop the absolute best talents and the employees who can be part of making the company even more profitable, effective and sustainable. So we actively recruit within the area where we see the greatest potential. With this, I conclude the presentation and open up for any questions.

Om du vill ställa en fråga tryck fyrkant 5 5 på din telefon för att ställa dig kön. Om du vill dra tillbaka din fråga välj en tryck fyrkant 6. Den nästa frågan kommer från Johnny Jin från SEB. Varsågod.

Hej och god morgon Andreas och Liselott. Tack för att ni tar min fråga. Några frågor från min sida. Om vi börjar med timpriserna. så hade det varit intressant att veta hur mycket de har ökat år över år, och hur lönerna samtidigt har utnyttjats under samma period, så att säga. Det är min första fråga.

God morgon på dig. Tack för frågan. Vi har jobbat intensivt med att ligga rätt mot marknaden med våra timpriser och det här är någonting som branschen överlag är duktig på att göra. En av nyckelfaktorerna till att behålla marginalen så därför är det viktigt att hela tiden löpande jobba med indexregleringar och säkra rätt pris i rätt uppdrag. I am satisfied with the level of this, and it is in line to meet our increase in wages, so I see that the effect on the margin here is there. The strategy forward is that, also in line with the market, to continue working on this issue.

Okay. And speaking of profitability, I understand that it is a tough market and you are working hard with cost efficiency measures. But my question here is really how much more is there to do on the cost side to help profitability? Or is it now that the market is helping to lift profitability from here?

Vi har jobbat otroligt bra med våra kostnadseffektiviseringar och det här är en del som kommer att ligga i vårt DNA framöver att vi hela tiden var rädd om våra intjänade pengar. Jag ser att tidplanen för det här löper på enligt plan som vi tidigare utlovat och med det här så har det också kommit en hel del andra effekter på övriga omkostnader så jag ser att det finns överlag en An important part is to continue to be on this issue. But the big effect of reaching our financial goals in the next step is to increase our debiting rate. As I said, every percentage corresponds to 11 million kronor in the last row. So our big focus now is to intensify the marketing and sales to take the next step.

I understand. Thanks for that. And then I have one last question about the debiting rate, which is 68% in the quarter. I think it's possible to break down a little per segment here, and I'm going to check if there's any segment that you think sticks out in the debiting rate. Either negative or positive.

Yes, I think that everyone is affected by the lagging market, of course. But we see improvements, especially in one segment, which is installation. We see a small, small improvement in architecture and management. What has been the most challenging this quarter is, as Andreas described, construction and the environment. som är mer drabbade av den avvaktade marknaden på grund av nyproduktion där projektet inte kommer igång i tillräckligt hög takt och så vidare. Och där syns ju också den stora effekten egentligen lönsamhetsmässigt.

Bra förstår. Tack så mycket för de svaren. Stort tack. Stort tack.

The next question is from Stefan Knutsson from ABG. Please go ahead.

Good morning, Andreas Lislott. First, I wanted to check what kind of exposure you have for the group right now. Sorry. Hi, good morning, Stefan.

What did you say? What do you think the group has for... Can you hear me?

Yes, we can hear you. Okay, great. I repeat, what kind of exposure do you have to the end market for the time being in project engagement? Can you clarify your question? Exposure to? Which end markets?

How much exposure do you have to housing, commercial properties, industry and the like? Thank you so much, Stefan. We have a good mix of private and public customers. Here we have succeeded with a rearrangement, especially on installation, to mix and work both against De entreprenörer som kommer igång med sina projekt, vi har riktat om en hel del av verksamheten mot de initiativ som tar kopplat till säkerhet och försvaret till exempel. Vi har The average turnover is somewhere around 12-13% compared to housing. We have seen a decrease this year, of course, but that depends on our own will to move towards other markets right now, but also how the market looks. Overall, if you look at it historically and perhaps also from experience, it is a pretty normal mix we have there. If I just add a little bit, then we increase our revenue towards industry segment, defense, as I just said. And we also see that we have a good distribution towards, for example, commercial properties, despite the fact that it is somewhat neglected. But there are still dangerous things happening there as well, and something that we se det en viktig marknad och som kommer att faktiskt komma igång när väl marknaden vänder.

Hur upplever ni generella marknaden mellan Q2 och Q3? Lite förvånande kan jag tycka att tappet blir större mellan kvartalen.

When we look at the macro-environment, we see that the level of uncertainty has increased during the year, or rather that the recovery has been a little bit in the future. We see that in the macro-environment, so it is a waiting market. At the same time, It indicates that the recovery will come. The macro-environment has been difficult. As I said earlier, the recovery will come with a reduction. The effects of the reduction will come with a reduction. Great.

Jag tror att det var de frågor jag hade. Jag får tacka så jättemycket.

Tack Stefan.

Tackar.

Som en påminnelse om du vill ställa en fråga tryck fyrkant 5 på din telefon.

Då ska vi se.

Det finns inga fler frågor från telefonlinjerna just nu så jag lämnar över ordet till talarna för eventuella skriftliga frågor och avslutande kommentarer. Varsågod.

Tack för det. Då har vi fått en fråga som handlar om industri. Hur förhåller det segmentet sig till byggnader och deras närmiljö som har varit PEs fokus under en längre tid? Kommer det bli en satsning på industrikompetens framgent via exempelvis kompetensförstärkning?

Tack för frågan. Som vi beskrev så har vi fullt fokus på att rekrytera i alla de segment där vi ser att vi har en tillväxtpotential. Industrins gröna omställning är jätteintressant. And here I think we need to increase our focus further. But that applies to all parts of society and the business world that need to change. It is green transformation, both in properties in general, but also within industry. It can only be linked to another type of transformation related to resistance, resilience and safety properties. There we have, as we describe in the report, than the demand, and then our full focus is also to recruit competence that is relevant and good in those areas.

Thank you, Andreas. Then we have another question. Hi, Andreas and Liselott. I have a question about your deductions on useful rights. In the quarter, you wrote off just over 12 million kronor, corresponding to about 50 million kronor per year. Finns det anledning att tro att avskrivningen ska ner ytterligare i kommande året? Notera att ni tidigare har skrivit av cirka 40 procent av det bokade värdet i balansräkningen. Yes, this is about our large cost efficiency program where we work intensively to go through all our local stock and we take it in different rounds, one might say. It partly depends on how long the contract we have, how long the contract, how long the contracts we have and how we want to move together in different cities where we have had several offices. Ja, min bedömning är att vi ligger på en takt nu som är i nivå med vad det kommer att bli framöver. Vi kommer att ha en möjlighet att se över våra lokaler under 2025 också. Det finns några lokaler där vi kommer att förlänga kontrakten vilket kommer att påverka skuldsättningen men samtidigt så finns det delar där vi kommer att minska. Min bedömning är att det kommer att vara ungefär lika. That's it. I don't see any further questions, Andreas.

Thank you, Liselotte, and thank you to everyone who has contributed and shown interest and asked questions. I would like to conclude by saying that despite this declining market situation, it is with great enthusiasm and strong faith in the future that I, as the new CEO, together with employees and management, have started a journey. We will improve PE's value creation and position on the market. PE is a company that stands for innovation and leading competence within construction, design and architecture. So we will be central to all actors who want to intensify the transition to a more sustainable, innovative society. And I look forward to realizing that. Thank you very much and I look forward to wishing you a pleasant weekend.